Warren Buffett’s big bets set to haunt the $1.4 trillion giant he built |
Warren Buffett’s big bets set to haunt the $1.4 trillion giant he built
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Warren Buffett shared his usual wisdoms about patience, diligence, prudence and kindness in a CNBC interview the morning of Berkshire Hathaway’s annual meeting last weekend, the first in many decades that the oracle did not lead. But the sign that hung above him spoke loudest.
It read “The Legacy Continues.” That legacy is Buffett’s track record of doubling the return of the S&P 500 Index over six decades, a singular achievement that makes him the greatest investor of all time and turned Berkshire into a powerhouse with a market cap of around $US1 trillion ($1.4 trillion). The continuity is a wish that Greg Abel, who took over for Buffett this year and presided over Berkshire’s annual meeting for the first time, will be able to replicate Buffett’s success.
Stock pickers only have so many levers in their quest to beat the market. Buffett’s use of value, quality and leverage are well known, but he made good use of two others: size and concentration. In Berkshire’s early days, Buffett managed a relatively modest sum, which allowed him to buy smaller, overlooked companies. That size advantage gradually disappeared as word of Buffett’s investment prowess spread and money poured in. What remained was Buffett’s willingness to bet the company’s stock........