Matt Stichnoth's notes from Berkshire annual meeting. WB: We started out almost 50 years ago to the day - May 4, 1956, with $105,000. You don't need to have a lot of great ideas. I'd follow the same strategy we follow now, although we'd be able to look at smaller stocks than we look at now. We'd have a tougher time finding businesses to buy, since sellers wouldn't know about us. Charlie started out in real estate. In real estate, you don't need a lot of capital to start out with, because you can leverage your brainpower. But our basic process wouldn't have been different. I may have been 100% in Korean stocks.
We’d look for something that was mispriced and underowned.
CM: Finding a single investment that will return 20% per year for 40 years tends to happen only in dreamland. In the real world, you uncover an opportunity, then you compare other opportunities with that. And you only invest in the most attractive opportunities. It’s all about opportunity cost. The game hasn’t changed at all. That’s why modern portfolio theory is so asinine.
If Warren were starting today, he’d put together a concentrated portfolio. Your 1 or 2 best ideas are way better than the rest. So when you act, you’re thinking about how the alternatives compare to your best idea. But you don’t want to own your 10th-best idea when you can use that cash to invest in your best idea
Read the complete notes by Matt Stichnoth
We’d look for something that was mispriced and underowned.
CM: Finding a single investment that will return 20% per year for 40 years tends to happen only in dreamland. In the real world, you uncover an opportunity, then you compare other opportunities with that. And you only invest in the most attractive opportunities. It’s all about opportunity cost. The game hasn’t changed at all. That’s why modern portfolio theory is so asinine.
If Warren were starting today, he’d put together a concentrated portfolio. Your 1 or 2 best ideas are way better than the rest. So when you act, you’re thinking about how the alternatives compare to your best idea. But you don’t want to own your 10th-best idea when you can use that cash to invest in your best idea
Read the complete notes by Matt Stichnoth
