Post #16906 by mungofitch on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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Why would it outperform a higher risk / higher reward collection of companies in the long run

Arguably there is a fallacy built into the question, depending on your definitions of risk.

The worst definition is price volatility. On that front, ENH is backwards and always has been within the equity world...low volatility stocks outperform high volatility stocks over time.

High risk investing (in the meaningful sense...permanent loss of capital) can work well, but only when managed in the "dhandho" way...heads I win, tails I don't lose much. That's one of the reasons I like option contracts. If you're going to be long plain stock, be long something that isn't full of hot air.

Jim

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