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

To: Tomato who wrote (1158)	3/16/1999 1:50:00 AM
From: James Clarke	Read Replies (1) \| Respond to of 4691

Tomato - I would not buy Coke or Gillette even if they dropped 20% from their current prices tomorrow. But after that I'd look. That said, if I had a cost basis of less than 25% of the current price and had a 38% tax rate, I would sell neither. What this all boils down to is that I would not have bought BRK for the valuation of the stock portfolio. I LIKE the fact that he holds a warchest of cash to invest on my behalf when he finds the opportunity. And I think the General RE deal is much bigger than people realize. And the reason General RE is going to be a home run has absolutely nothing to do with Buffett's investing in common stocks. He has created an insurance company with the ultimate competitive advantage for that industry - EXTREME size. If you've got $45 billion of capital, you can underwrite things NOBODY else can do. And how do you think he will price that underwriting? After reading that annual, it is clear to me that the price of KO and G are not going to determine my return on this stock. Rather, it is going to be the economics of the General RE merger, with the kicker being what he does with the $13 billion in cash over the next 10 years (yes, that's years, not days jhg). What makes me want to learn from this man is that he has never made a big mistake in his career - and he bets big. I don't know of another investor who could claim that. My bet buying BRK in December (at 1,956 from the index funds selling General Re for robotic reasons) is simply that he did not make his first mistake on the biggest investment he ever made. The track record speaks for itself. JJC