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I think you're missing the way Warren Buffett and Berkshire invests. He takes low risk, profitable companies with proven track records and strong management te

I think you're missing the way Warren Buffett and Berkshire invests. He takes low risk, profitable companies with proven track records and strong management teams. Geico, Fruit of the Loom, building products and materials etc. Its a very different mindset then what Google is doing when it invests in self driving cars. Every company thats profitable re-invests those profits in some way. Trying to lump the way Google or Amazon uses their excess cash is different then the way Facebook does (Facebook builds moats mostly) and definitely different then the way Berkshire does.

ethbro 10y ago
My main point on making the comparison was the scale at and frequently with which it's done rather than the investment strategy. (1) Core technology & monetization -> (2) Cash Flow -> (3) M&A to Fuel (1) -> (4) Goto 2 Looks different at that size than it does for smaller entities. And if you have a revenue stream generic enough to feed on a variety of inputs, then you have huge flexibility in what you can purchase. And you can likely afford to pay more because you've got efficiencies of scale on your side (including access to hyper-scale amounts of data).
- arohner 10y ago
  What you've described looks more like Amazon's strategy. It's probably more correct to say Google & Facebook are copying Amazon rather than BH. The core of BH has ~20 employees. Warren Buffet always calls out his subsidiary CEOs for doing a great job, because BH couldn't exist in its current format if he had to manage day-to-day operations in any subsidiary. The steps in Buffet's algorithm are the same, but the emphasis is different. Amazon builds moats and cashflow, while BH buys stable companies that already produce cashflow. BH doesn't need moats, only profit. Amazon, Google, FB need both moats and profit. Buffet's algorithm looks more like: - (1) Identify stable, profitable businesses that WB understands - (2) if they're a good bargain, and it moves the needle on BH stock, buy - (3) goto (1)

ethbro 10y ago

My main point on making the comparison was the scale at and frequently with which it's done rather than the investment strategy. (1) Core technology & monetization -> (2) Cash Flow -> (3) M&A to Fuel (1) -> (4) Goto 2 Looks different at that size than it does for smaller entities. And if you have a revenue stream generic enough to feed on a variety of inputs, then you have huge flexibility in what you can purchase. And you can likely afford to pay more because you've got efficiencies of scale on your side (including access to hyper-scale amounts of data).

arohner 10y ago
What you've described looks more like Amazon's strategy. It's probably more correct to say Google & Facebook are copying Amazon rather than BH. The core of BH has ~20 employees. Warren Buffet always calls out his subsidiary CEOs for doing a great job, because BH couldn't exist in its current format if he had to manage day-to-day operations in any subsidiary. The steps in Buffet's algorithm are the same, but the emphasis is different. Amazon builds moats and cashflow, while BH buys stable companies that already produce cashflow. BH doesn't need moats, only profit. Amazon, Google, FB need both moats and profit. Buffet's algorithm looks more like: - (1) Identify stable, profitable businesses that WB understands - (2) if they're a good bargain, and it moves the needle on BH stock, buy - (3) goto (1)