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Foreign Investing and Diversification Lessons From Berkshire Hathaway

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Foreign Investing and Diversification Lessons From Berkshire Hathaway

Since the claim is that he is/was the greatest asset allocator ( and I agree its true up until late Nineties), it should be fair to look back and examine why he underperformed (relative to broader measures for markets and earnings). I'm not trying to pick on him, just setting the record stright since often his record goes unexamined (or poorly examined). To end the discussion I'll use his terms to examine his "core holding" $ base assets and focus on "margin of safety". By all measures, there was little margin of safety for the dollar in the late Nineties, as repeated ad nauseum by the # 1 economist Stephen Roach (and aware to any one else that opened their eyes). It is almsot 50% down from highs (versus euro, we are really not referring to emerging markets at all as you suggest), and as he himself admits now, seems in trouble (longer term) unless something is done to drastically reduce twin deficits. Why he didn't act sooner can only be answered by him.

Foreign Investing and Diversification Lessons From Berkshire Hathaway

I won't argue whether he does/did (and will do) a good (in fact great job), but only the point of diversification (and non $ earnings sources). By currency, the $ is overrepresented substantially relative to the US economy's representation globally. Even if one assumes he is "talking" to US based shareholders who save, spend, invest in $. For the most part BRKA investors (mostly wealthy individuals and institutions who don't ever selll the stock) would have benefited more in the last ten years by a more diversified earninngs and balance sheet. Cheers

Foreign Investing and Diversification Lessons From Berkshire Hathaway

With all due respect Mr Considine, the last thing that can be said is that his highness was on the ball with regard to international diversification (please read other comments in seekingalpha. $ sourced earnings are still poorly represented even after adjusting for equity holdings and recent investments) In fact, you misrepresent his views on diversifcation generally. He most certainly does not view portfolio diversification (by sector or industry) as important, and has always insisted on concentrating on areas where he has a "competency" (i.e. insurance/financial services). As far as industry representation he "missed" the drug industry surge through the end of the 90's and "avoided" (rightly or wrongly) technology, telecomm, for decades. He only recently started investing in energy. As far as investing i "stable and well regulated" countries, he is tacitly admitting that the US (net borrower) is mortgaging its future. If he would have acted accordingly (to his stated concerns about the $ and deficits) ten years ago, BRKA would be much higher. Give credit where credit is due, but certainly not where it is not due.