Berkshire Hathaway's Crummy Quarter
In 1969, unable to find many high cash flowing businesses at reasonable prices, Warren Buffett closed his investment partnership and distributed shares of a holding company, Berkshire Hathaway. Aside from a few modest investments in newspapers and insurance companies, it was not until 1973 that Buffett began to excitedly buy stocks within what had become a holding company, Berkshire Hathaway. Despite his excitement, his new worth declined 50% between '73 and '74, in the teeth of a bear market. Berkshire Hathaway, a textile and garment maker founded in Adams and New Bedford Massachusetts, was in fact a pretty poor investment. Turns out that garments and textiles could be made more cheaply in the Far East than in Massachusetts mill towns.
The Berkshire Cotton Mills, Adams Massachusetts
Berkshire's quarter was a big letdown from the same period in 2020, down some 66%. They will have to eek by on $10 billion in profits for the period. Why are we bothering to share this? Because an ugly earnings report from a company that is an amalgam of operating companies, from furniture stores, to candy makers, to rails is a reflection of an economy that is struggling to find it's bearings. The late October GDP report was poor, and reflected "skittish behavior" by the all-important consumer. Stocks are more expensive than, well, ever. More so than the Tech Bubble, the Financial Crisis, or The Crash of '29.
Party Like It's 1999!
"Wow, this is a downright sensation!"
Sure, the punch bowl and trendy denizens surrounding it are pretty alluring. We're not gonna do it. Nope. We're not gonna do it.