Berkshire has still done remarkably well, roughly keeping up with the S&P, probably because it has avoided really big catastrophes, and because the Apple success has pulled up results a lot, and because of LEVERAGE.
So I can't prove it, but I am sticking with my hypothesis that ok results with good leverage have been the key to success, at least for the last 25 years.
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The quality that many people miss from Mr Buffett's stock picking skill is not that that the companies he picks do amazingly better than the market, the thing that so many people try to look for, but rather that he tends not to put big money into things that go wrong. He has never had a realized loss of 1% of any portfolio he has managed.


This is a very important point - it's one of the 3 reasons I posited for Buffett's success, and one of the (many) reasons my investing has not done as well as his.

There are a couple of exceptions to Buffett's 'no 1% loss' rule. One is that Buffett wrote off $10b of the $32b PCP acquisition. In Q3 2015, when the deal was made, Berkshire's market cap was $354b, so that was a 3% writedown. Buffett makes his rule easier to meet because he never sells his subsidiaries, so technically, we could say they can never end up being realized losses, but to all intents and purposes, this is a permanent loss of 3%, well over the 1% bar.

What about Dexter Shoe? It was bought for $433m in 1993, when Berkshire was worth No wonder Buffett calls this acquisition his "most gruesome mistake". He says he gave away 1.6% of Berkshire for a business that turned out to be, in his words, "a worthless business," and even said that "As a financial disaster, this one deserves a spot in the Guinness Book of World Records."

Uncle Warren was exaggerating. It may have been his worst investment (before Precision Castparts, at least), but neither will get him a spot in the record book of blunders unless he significantly ups his game.

dtb