From Berkshire’s Annual Report:
berkshirehathaway.com
Add semiconductors to list of "must have" and you 'll know why i BUY Intel at these prices.
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But a pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns
some very old lessons: First, many in Wall Street ¾ a community in which quality control is not prized ¾ will sell
investors anything they will buy. Second, speculation is most dangerous when it looks easiest.
At Berkshire, we make no attempt to pick the few winners that will emerge from an ocean of unproven
enterprises. We’re not smart enough to do that, and we know it. Instead, we try to apply Aesop’s 2,600-year-old
equation to opportunities in which we have reasonable confidence as to how many birds are in the bush and when
they will emerge (a formulation that my grandsons would probably update to “A girl in a convertible is worth five
in the phonebook.”). Obviously, we can never precisely predict the timing of cash flows in and out of a business or
their exact amount. We try, therefore, to keep our estimates conservative and to focus on industries where business
surprises are unlikely to wreak havoc on owners. Even so, we make many mistakes: I’m the fellow, remember,
who thought he understood the future economics of trading stamps, textiles, shoes and second-tier department
stores. |
