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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (4411)	5/15/2014 1:32:54 AM
From: Jurgis Bekepuris	Respond to of 4691

After reading "Snowball" I agree with Economist. Not about BRK breakup, but about its underperformance after Buffett. I think pro-BRK writers do not appreciate enough how special Buffett is. Reason 5 is the most obvious that goes away once Buffett is not there anymore. It's pretty impossible to replace his network of contacts and would-be sellers. Reason 11 is also clearly gone. Buffett's BRK stock goes to Gates foundation, which is required by law to dispose of it within 5 years (I believe). Munger is already a very small shareholder of BRK. Reason 12 is not true historically. Read "Snowball" about how Buffett chose to sacrifice billions of free return for the somewhat sentimental value of keeping BRK intact. I don't blame him, but expecting rationality after him is also tall order. Regarding trust and great managers in BRK. Actually, BRK had quite a few turnover/management change situations. Buffett was not very great in buying great managers, but he is great in getting great managers into right positions eventually. There is no guarantee that his replacement will be as good. I have not decided what I will do with my BRK stock when Buffett dies. I expect a sharp drop tempered by immediate stock buyback - I am sure Ted/Todd are instructed to buy back tons if stock tanks. But I don't know what will happen after that. Most likely I will sell.

To: Glenn Petersen who wrote (4411)	5/15/2014 4:18:42 AM
From: Shane M	2 Recommendations Recommended By bruwin Jurgis Bekepuris Read Replies (1) \| Respond to of 4691

Glenn, thanks for posting. I liked this part: Charlie Munger sets the stage on this point simply: “A lot of people think if you just had more process and more compliance—checks and double- checks and so forth—you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust.”… “Good character is very efficient. If you can trust people, your system can be way simpler. There’s enormous efficiency in good character and dis-efficiency in bad character.” I'm semi-retired now, but this comment resonates with me from my experience in the corporate world. So much process is tied up in watching and controlling what people are doing, that it can become difficult as an employee to get things done. Alot of process seems focused on preventing things from happening. So much effort can be expended in trying to get everybody pulling in the same direction that nobody ends up pulling in any direction because motivation gets smashed. I was lucky to a large degree because I was given a long leash, so I could just do things and ask for forgiveness later - but toward the end before I left it felt more like a lack of trust in individual decision making at all levels was infecting the organization. Talk about demovitators - that'll do it.