Best investment adviser Richard Losch's blog

Berkshire Hathaway's Growth Rate

Total pretax Berkshire Hathaway's operating income has grown from $329 million in 1987 to $7.5 Billion in 2005. The growth for the 19 year period works out to annual rate of 19% which is not bad for a company the size of Berkshire Hathaway, but what is more interesting to me is that the rate for the last ten years is 24%. Better yet the growth rate for the last 5 years is also 24%.

Berkshire Hathaway's 1st Quarter 2006

I, as investment manager, think it likely that first quarter earnings at Berkshire Hathaway will surprise many. I, as investment manager, have tried to estimate Berkshire Hathaway's quarterly results in the past and have not been particularly successful.

Berkshire Hathaway Annual Report 2006

Despite four hurricanes and an almost one billion dollar loss to their foreign currency position, Berkshire Hathaway still had a pretty good year.

Inflation Is

Since money is just another commodity, the more you increase the supply (the amount of currency circulation), the more you drive the price (value) down. This makes sense and how can you argue with the guy that wrote the book on monetary policy, and who won the Nobel Prize for his effort. Yet this rule of Dr. Friedman's now seems to have been suspended, if not repealed.

2005 Investment year results

2005 investment year was a pretty dull year for Losch Investment Management Company's accounts and the market as a whole. With the composite of Losch Investment Management Company's accounts up 2.18% for the year, we fell in between the Dow which was down 0.61% in 2005 and the S&P which was up 3.0%. The good news is that we were able to accomplish this while we maintained a very low level of risk.

Exogenous Events

In the world today does it really matter what the name is on the paper? Yuan, Yen, Euro, Won, or Dollars, they are all exchangeable and transferable to anywhere in the world overnight. There is lots of evidence that the world is awash in cash, yet no one is worried about a serious inflation.

The Price of Easy Money

The problem is that prolonged comfort has conditioned financial institutions globally to price their financial contracts with inadequate risk premiums. If pain is the mother of wisdom, does not comfort make us stupid?

Berkshire Hathaway Look-Through Earnings 2005

This would mean that per-share earnings growth for the seven year period was equal to 15.2% on an annual basis for the period that includes both the purchase of General Re and 9/11. During the same period, GE has grown its per-share earnings at an annual rate of 9.8%, and Microsoft at 15.8%.

Bill Gates purchased Berkshire Hathaway

During the week of September 5 to September 9, Bill Gates purchased 260 shares of Berkshire Hathaway Class A stock.

Unintended Consequences

Expansionary monetary policy promotes growth, prosperity, and full employment, but as always there are unintended consequences and when the medicine is applied to an economy too liberally for too long, money becomes so easy that the games begin. Huge sums are available to managements whose main imperative is self enrichment. Equity bubbles expand, companies like Enron appear, flourish, and spread their lust for fast, conspicuous wealth as if it where a communicable disease.


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