Right now, Warren Buffett’s holding company Berkshire Hathaway pumps out about $12 billion per year in annual profit. Because it owns extensive insurance operations that experience fluctuating profits, it is not as easy to determine Berkshire’s normal earnings power as it would be, for say, Kraft’s food packaging divisions which have pretty predictable demand for macaroni and cheese, Oscar Meyer hot dogs, and Maxwell House coffee, but still–$12 billion is a good estimate of what “normal” profits look like each year for Berkshire shareholders.
Originally posted 2013-07-28 07:57:09.
I just finished reading this article by Bill McClellan of the St. Louis Post-Dispatch that discussed how a teacher with over 27 years of teaching experience in the Kirkwood area of Missouri lost her job. The interesting thing about the story is that the archdiocese decided to get rid of her, even though she didn’t seem to do much of anything wrong. She was told that “she lost her passion” and would not be retained.
Although this is just one small story, I think it serves as a microcosm of the changing nature of the informal social contract in American society. One of the reasons why some people look back upon the 1950s, 1960s, 1970s, 1980s, and 1990s with fondness is because it represented an American economic era in which you could put together a good life for yourself if you had a strong work ethic, showed up, and didn’t screw things up.
Originally posted 2013-07-27 07:20:38.
For those of you who are students of stock market history or have been on the investing block for a while, you may know that there was a period of transition between when Warren Buffett ran his private partnership for select investors and when he began using Berkshire Hathaway as his wealth-building vehicle.
During this period of transition from a partnership to Berkshire, Warren Buffett became disillusioned with the high prices in the stock market at the time. During the late 1960s and early 1970s, the major firms in the stock market were going through their “Nifty Fifty” days. This was a wild time when Coca-Cola traded at 40x earnings, Johnson & Johnson traded at 30x earnings, Pfizer traded at 28x earnings, and even Procter & Gamble traded at 28x earnings.
Originally posted 2013-07-26 07:50:00.