Warren Buffett’s fifty-year history lesson

There is more meat than usual in Warren Buffett’s annual letter to shareholders, out today, including reflections by both Buffett and Charlie Munger on the fifty year history of their involvement in Berkshire Hathaway, and why it has been such an exceptional success. If you are so minded you can read this well-known story as an extended indictment of short termism in both corporate boardrooms and the marble halls of investment bankers (especially the latter). Both Buffett and Munger claim that their unique corporate model will enable Berkshire the company to outlive thier personal involvement for many years to come, although I suspect history may not be quite so forgiving.

a sub-par sage can still be a Genius

Has the Sage of Omaha, now 82, lost his touch? In his annual letter to the stockholders of Berkshire Hathaway published last week, Warren Buffett admitted a “subpar” performance in 2012. He acknowledged that his next annual letter may show that, for the first time, his fund had underperformed the S&P index over a five-year period.

Bring on the March of the Algorithm Merchants

“I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will”. That was one of the first epigrams from Warren Buffett that caught my attention twenty years ago when I was researching a thesis on the Sage of Omaha’s stockpicking methods at MIT. What belatedly dawned on me the other day was that something similar might just as easily these days be said about the fund management business: “Try to buy a fund whose investment style is so simple that your kid’s computer could run it. Because sooner or later, one will”.