Hi GI2,
Not necessarily. I'd suggest reading on page 46 "consolidation stocks Preparing for a rise".
Berkshire has a very unique business Modus Operandi.
They buy companies with strong balance sheets that have a wide moats
to competition pressure, AND pay a dividend.
Upon the acquisition's completion, they no longer pay a dividend and keep that money flow inside the conglomerate entity.
That is what over the many years of acquisitions, Berkshire keeps building such a tremendous cache of cash in which to buy strong companies during general market sell offs.
It really is a patient, brilliant and very optimistic business model.
They also provide financial funding for companies that are too extended during the same general market sell offs. I.E. GE and Goldman Sachs in 2008, or OXY in 2020. Their horde of cash is well known to Wall Street. If it is a solid company with too much debt exposure, Berkshire saves them while charging a high interest rate and writing huge quantities of warrants at below market prices (to be exercised after a recovery is imminent). It extracts a high rate, but keeps Berkshire's interest in assuring its recovery, so it can implement a large below market position in the recovered company.
Berkshire does have dips, but it has more been a high level consolidation stock that is a safe purchase if bought on a break out to new highs. It has maintained that position for a long time due to their huge cash positions and historic cash flow.
I agree that some stocks ARE dogs and many of Ted's picks are/were dogs and many do go broke.
Keep in mind Ted only received a 6th grade education.
He bet patiently on long trends that show discouraging price action. He did not read the 10Q's.
Ted won big on some and lost little on a few.
His approach worked for him in general.
The mix of occasional multibaggers when mixed with as many if not more small losses - rewarded him well over time.
That is why I have introduced Ted's approach when combined with fundamentals,and solid balance sheets as a better filter to avoid the many dogs out there.
In today's era (which was not AT ALL what Ted dealt with), provides all of the new filters /data at our fingertips. Keep in mind Ted's main tool where M.C. Horsey monthly chart which where mailed to him on a monthly basis.
Bob |
