OK. Let’s show our stock picking skills. What company will have the highest and the most predictable return over the next ten years? Berkshire may be the most predictable, which means that we can put more of our portfolio into BRKB, but it’s highly unlikely to have the highest return. I think that honor will go to one of the big tech firms. Maybe we can come up with a small, Berkshire Board stock pickers’ portfolio.
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The world’s best stock picker seems to be going with Occidental, Apple and Berkshire Hathaway. I think I would choose Google, Microsoft and Taiwan Semiconductor. The smart money would bet on Buffett.
Speaking of Apple, I just bought a new, home computer, an Apple iMac. $1400 base price for a 5nm CPU made by TSM and a 24" screen. Wow. I’m not good enough with computers to take advantage of it, but I’m not worried about getting my money’s worth.
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Berkshire may be the most predictable
Railroad, chemicals, housing all are cyclical businesses, Insurance is lumpy. Outside of BHE most operating businesses are cyclical or lumpy. The collection of operating businesses are not natural hedges to the businesses amongst them.
How you are arriving they are predictable businesses?
Setting aside the valuation Microsoft is a stable business, strong moat in office, windows, Outlook, Azure the second best cloud business, growing nicely. TSMC, semi-conductor requires forever increasing cap-ex, I don’t like it.
Speaking of Apple, I just bought a new, home computer, an Apple iMac. $1400 base price for a 5nm CPU made by TSM and a 24" screen. Wow. I’m not good enough with computers to take advantage of it, but I’m not worried about getting my money’s worth.
I’m retired and therefore do not live in a Windows Office environment anymore, so you’re going to really enjoy that machine. I replaced my vintage 2007 iMac last year, and bought the same one you did with their new M1 chip less than a year ago and couldn’t be happier. I just do basic stuff, but I paid about the same with a veteran’s discount…I think maybe $100 more to get the extra thunderbolt ports and maxing out the RAM to future proof the advancements in OS upgrades…I tend to keep my Macs a long time, and so far, this thing runs flawlessly, and boots up super fast…at least for my limited needs. It has more capability than I’ll ever need. I was blown over by how thin it is on the side…about the same width as the iPhone I own. Obviously, I live in the Apple ecosystem, and sync all my devices – my iPad, iPhone, and iMac. It’s pretty easy peasy and user friendly once you establish a comfort zone and get into the game… Probably will never leave, because at my age, the learning curve to Android or any other system would just be another hassle for what I need to do.
Enjoy your new Mac!
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At the risk of semi-hijacking the thread, a related thought:
It has been a long time since we have discussed any of the picks by Todd and Ted, the longer tail of smaller disclosed stock positions.
What are the best bets hiding in there?
Has anybody looked closely at any of these?
After all, the best way to come up with a good investment idea is to steal it.
Jim
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The world’s best stock picker seems to be going with Occidental, Apple and Berkshire Hathaway. I think I would choose Google, Microsoft and Taiwan Semiconductor. The smart money would bet on Buffett.
Since I aspire to be smart money, I am also going to bet on Berkshire. But if Berkshire didn’t exist, or if I had to choose between Occidental, Apple, GEICO and BNSF vs Google, Microsoft and TSM, I would go for your picks. To which I would add Meta and Progressive, since Progressive is eating GEICO’s lunch, and from the current price, Meta may have pretty good returns, in addition to being predictably great.
I think my 5 will outpace Berkshire, even if China invades Taiwan and Zuckerberg bets the farm on augmented reality. But I will sleep better at night by continuing to have a big position in Berkshire as well.
dtb
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"I think my 5 will outpace Berkshire, even if China invades Taiwan "
your top 5 (and mine btw) include Apple. Hard to imagine Apple not taking a massive hit with an invasion.
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Hard to imagine Apple not taking a massive hit with an invasion.
And that would be a hit to intrinsic value, not just price.
There are many possible China-related news items other than a Taiwan invasion that would cause similar problems.
Apple’s dependence on the goodwill of Mr Xi is the thing that keeps me up at night more than anything else about Berkshire.
TMSC seems a bit risky for a big position for the obvious reason.
ASML would seem to be the safer way to play almost the same game.
Jim
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“There are many possible China-related news items other than a Taiwan invasion that would cause similar problems.
Apple’s dependence on the goodwill of Mr Xi is the thing that keeps me up at night more than anything else about Berkshire.”
fully agree. plus I have a sizable position in Apple that has a very low cost basis.
keeping me up as well.
your top 5 (and mine btw) include Apple. Hard to imagine Apple not taking a massive hit with an invasion.
I like Apple, but as an investment, I would prefer Google, Microsoft and Facebook. Since invested in Berkshire is a big investment, I end up getting Apple despite thinking it is overpriced right now, in addition to stagnant sales and serious existential threats, including (but not limited to) war in Taiwan.
I think that at this point, if you think there will be no war over Taiwan, you’ve got some explaining to do. China has basically said that Taiwan is there’s, that Taiwan has no right to exist independently, and that it would go to war to get Taiwan if Taiwan doesn’t voluntarily become part of China. And you have Taiwan that doesn’t want to become part of China. Although my sympathies are entirely with Taiwan, I can’t see how you can realistically expect that war can be avoided.
If and when it comes to war, almost any business in China will be damaged, including Apple, so I agree that that would be a massive hit. But businesses that are actually in Taiwan, like TSM, will be hit even harder. Who is doing worse right now, businesses in Russia, or businesses in Ukraine? So I think a small investment in Apple, via Berkshire, is a lot less risky than a top-5 investment in TSM.
dtb
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To make this a bit more fun, I will just stick with the Bs, i.e. ticker symbols starting with B as in BRK.A.
My three picks would be BABA, BAM and BLK.
Of course in real life, I would never put more than 5% in any one stock, except BRK.
“What are the best bets hiding in there [among Todd and Ted’s purchases]?”
Mastercard and Visa were purchased in 2011, after Todd joined Berkshire in 2010. They comprise 0.4% and 0.5% of Berkshire’s portfolio respectively. I haven’t looked closely at MA and V, but they have strong franchises and very high ROE.
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I think that at this point, if you think there will be no war over Taiwan, you’ve got some explaining to do. China has basically said that Taiwan is there’s (sic)
There won’t be a war over Taiwan. China takes the long view. Eventually they will get it without having to fire a shot. Probably beyond our lifetimes.
It would be a very tough nut to crack. 100 miles of ocean to cross, a shortage of good beaches to land a large invasion force, impossible to build up an invasion force unnoticed.
Much better to just wait it out.
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It looks like we have the beginning of a portfolio: BRKB (largest holding), AAPL, GOOGL, MSFT, META, ASML (not TSM), BABA, BAM and BLK.
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It looks like we have the beginning of a portfolio: BRKB (largest holding), AAPL, GOOGL, MSFT, META, ASML (not TSM), BABA, BAM and BLK.
Oops. I left out PGR.
Ten stocks is a good start.
"To make this a bit more fun, I will just stick with the Bs, i.e. ticker symbols starting with B as in BRK.A.
My three picks would be BABA, BAM and BLK."
Your picks of best companies from this tread had some other nice letters, too, like Q for QCOM.
https://discussion.fool.com/best-companies-35134055.aspx
Are there any that would make the cut for highest return?
I still like Carmax (KMX), both the business and the current valuation.
It’s admittedly a small fan club, but the price seems to have passed its peak out-of-fashion point:
it has now been outperforming the average large cap since late April.
I still like the Dollar Stores for the long haul, but I’ll wait for the next inevitable dip to get back in.
Jim
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China has basically said that Taiwan is there’s (sic)
There won’t be a war over Taiwan. China takes the long view. Eventually they will get it without having to fire a shot. Probably beyond our lifetimes.
There’s a good chance that that won’t be the last time I make that typo! Whatever the Chinese may think, Taiwan is not theirs - and I certainly hope you are right that China will take that long view.
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“There won’t be a war over Taiwan”
It isn’t an absolute. It is an assessment of a probability. It simply can not be zero.
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