I hate the Coronavirus for many reasons but one really big and odd reason I hate this damn virus and what it rained down on us with its lockdowns and closures, was that it stopped me hanging out with Warren Buffett this weekend! So when you’re reading this, understand that this piece should’ve been ‘penned’ from my hotel room in Omaha, Nebraska ahead of my Saturday session with arguably one of the greatest investors of all time — Warren Buffett.
My wife and I bought a share or two in Berkshire Hathaway (BRK), which qualifies you to attend the AGM of Buffett’s famous company.
The BRK A-shares now sell for $284,749 and no, that’s not a misprint (we bought the ‘cheaper’ version!). That’s the price and it underlines just how good Buffett has been for the company and the shareholders who jumped on board in 1964 and took over the company. Number crunchers say the effective price of BRK was about $12.37, so anyone who has backed Buffett would love the guy — big time!
Apart from attending, we were going to film Buffett and share it with our followers but alas, that damn Coronavirus ruined that good idea.
Is there anyone in the world who doesn’t hate the Coronavirus? Believe it or not there are those who pathetically would love it! Yep I know a rather odd guy who has made millions because he shorted the stock market for other reasons and ‘got lucky’ that the pandemic came along!
Meanwhile, there are others who are natural doomsday merchants who saw the problems in China in early January and threw their switch to panic and prepared for the worst of circumstances. They did the same with so many virus scares — SARS, Ebola, Mers, HIV and so on — and bought gold and sold all their shares. They did it with the GFC, expecting a recession and a collapse of house prices. They did it with Trump’s trade war, Grexit, Brexit and September 11.
They are often scared, spooked and given to forecasts of doom and gloom. And they’re often wrong, with a capital W. But like author Harry Dent, they keep believing and one day they might get their perfect storm of bad stuff that ends in a Great Depression, and that’s just the way they are, except, unlike Harry, they don’t consistently make much money out of their gloomy view on life.
I know very wealthy investors who play the doom game through a hedge fund but I don’t know many normal people who have doomed themselves into consistent wealth-building, leaving them fabulously rich.
On the other hand, I do know many who have played the optimist’s game over time and have made themselves very rich. Despite some younger, go-getting types laughing at buy and holders out there, Buffett is a ‘buy and hold’ investor, so long as the key reasons for buying the business remain the same.
Some companies are worth buying and holding forever because things change. Take Seven West Media owns the 7 Network. In January 1992, this was a $1.26 stock but under great leadership from Kerry Stokes it became a $15 stock by April 2007. It’s now 84 cents but don’t blame Kerry. Blame the Internet, Netflix, Foxtel, deregulation of the industry and the new age of generations who are very different from their parents whose viewing habits made Kerry and his shareholders rich.
I know I flog this chart to death but it rams home why you should be a long-term investor in quality companies.
