>>"He is not always right. I believe he lost a bundle on Airline shares."<<
You are correct that Mr. Buffett "is not always right." By his own admission, Mr. Buffett came close to losing a bundle on an airline stock. Ultimately, however, he did not lose money despite his mistake.
Mr. Buffett admitted to being wrong about his airline investments in his 1996 Chairman's letter to Berkshire's shareholders: berkshirehathaway.com
In the letter he reported that, after having written down the airline's preferred stock, he tried to sell it for 50 cents on the dollar. "Fortunately," as he states, he "was unsuccessful." When the airline recovered, it made required enhanced dividend payments on the preferred stock, thus turning an apparent loss into a fat profit for Berkshire.
That, of course, is why Mr. Buffett is the world's most successful stock investor. He may make mistakes occasionally, but never big ones. The airline investment had a built-in protection for Berkshire, so that it did not lose money even while other investors in the airline did (in different classes of stock).
I believe that Mr. Buffett has never had a losing year, and has not lost money on a major investment. Indeed, he has often been quoted as saying that the two rules for successful investing are (1) never lose money, and (2) never forget the first rule.
If Mr. Buffett is proven wrong about MCD over the intermediate to long run, then I believe that it would be an unprecedented mistake for him, given the tremendous size of his investment. I won't take that bet. MCD may be "dead money" for quite a while, but sooner or later will prove to be another successful investment for Berkshire. |
