3 ms·

> W.B. actively goes out to seek and create value I would dispute this. Berkshire Hathaway is essentially an insurance company. Look at revenues. Buffet rel

> W.B. actively goes out to seek and create value I would dispute this. Berkshire Hathaway is essentially an insurance company. Look at revenues. Buffet relies on the peculiar accounting tricks of global insurance and his special relationships in the industry to line up unusual access to ultra-cheap capital at opportune times to seize value opportunities. Buffet is not just another billionaire investor with sharp analysis. He has a bag of special tricks and special relationships. He is just a speculator, not a value creator. The main point I took away is that speculation is a zero sum game, which is practically a truism. Getting returns above the general rate of growth requires outsmarting other investors and pocketing their losses. Total returns are constrained to the general growth rate. You are quite right that many people win at this zero sum game. Buffet seems to endorse the fraudulent popular idea that everyone can fund retirement from the stock market by sharing in the general rate of return. In reality the stock market has historically barely beat inflation and equities investing is really pretty much a straight-up zero sum game.

steveplace 18y ago
BRK.A is a conglomeration. Over the past decade they have been in the insurance business (GEICO). But they have also been in other businesses, and I would say that you could consider them like a private equity firm. They would buy companies of good value and build them out. They did it with furniture retail. There is a difference between speculating and investing. Speculating is zero sum and about 80% of the people that trade will lose money. Buffet actually says that diversification is a good idea if you don't know what you're doing. If you can value companies properly then you can have returns greater than the market (beta-weighted). Investing is not zero sum. I'm not going to defend that, it just is. That being said, buy and hold is a dumb idea too. And equities historically beat inflation if you consider dividend payouts.

steveplace 18y ago

BRK.A is a conglomeration. Over the past decade they have been in the insurance business (GEICO). But they have also been in other businesses, and I would say that you could consider them like a private equity firm. They would buy companies of good value and build them out. They did it with furniture retail. There is a difference between speculating and investing. Speculating is zero sum and about 80% of the people that trade will lose money. Buffet actually says that diversification is a good idea if you don't know what you're doing. If you can value companies properly then you can have returns greater than the market (beta-weighted). Investing is not zero sum. I'm not going to defend that, it just is. That being said, buy and hold is a dumb idea too. And equities historically beat inflation if you consider dividend payouts.