OK, there’s nothing new about lavishing praise on the investment philosophy of the world’s best investor - Warren Buffett - so many have done it, so many times. But Family Capital can’t resist doing it some more. Here’s why.
Go on Berkshire Hathaway's website, the investment group he and his partner Charlie Munger have built for more than 50 years. It’s like going into some parallel universe - a universe so different to the investment world familiar to everyone that it almost seems like a parody.
Of course, it isn’t. Berkshire is very really. What you get with the Omaha, Nabraska investment group is a form of capitalism completely removed from the one familiar to nearly everyone else. To remind everyone, here’s what the most familiar world of capitalism is usually about - glitzy marketing, slick presentations, and boastful about achievements - all presented in glorious super high-definition colour, often with many moving images. We all know it so well...
In contrast, Berkshire’s website is like going on some mock up of a prototype-website designed in early computer programming language. Could it still be written and designed in Microsoft Visual Basic from the early 1990s? This is the world’s most successful investment group and its website looks like an index page of the driest legal piece of text ever written?
Of course, Berkshire is doing this on purpose. It’s all part of the no-frills look it wants to convey. No waste here - and certainty no pretentiousness. After all, Berkshire and Buffett could buy most of Silicon Valley if they wanted to and create some out-of-this-world website that would get 10s of millions of hits and all the other bits of vanity likes, tweets and so on linked to our internet obsessed world.
But, when you know you’re the best investment business in the world, you can exist in this parallel universe. Just take a bit of time and go on to the website, but make sure you click on Buffett’s annual letter to shareholders, just released last week. It’s easy to find on the world’s most uncomplicated website.
This is what it’s all about - Berkshire’s legendary returns. These are laid out in a pretty familiar way at the top of Buffett’s letter, but here’s a quick precis of them. If you were lucky enough to have invested $1 in Berkshire stock in 1965, that same dollar would be worth $1,598,284 at the end of 2015. The same dollar invested in the S&P 500 would be worth $11,355. Berkshire’s returns are truly exceptional. Patient capitalism in its most blatant and celebratory form.
Further proof of this parallel world is presented at the end of Buffett’s letter. There are two photos. One taken at the 2014 Christmas lunch of the “home office crew” and one taken at the same lunch a year later. The point of the two photos is to show exactly the same people - there’s no extra faces, and no departing faces. They are exactly the same people.
This is what Buffett says about these photos: “Can you imagine another very large company – we employ 361,270 people worldwide – enjoying that kind of employment stability at headquarters?....That’s why you’ve never read about ‘restructuring’ charges at Berkshire.”
And he ends by adding this: “On April 30th, come to Omaha – the cradle of capitalism – and meet my gang.” Would anyone doubt his “cradle of capitalism” words? Omaha, and in particularly Berkshire, do live in a very real parallel universe. Those two photos are proof of it - and Berkshire just may be the cradle of capitalism.
After all, no where else claims to be anymore...