“The ques­tion is whether the as­sump­tions re­quired for Berkshire to gen­er­ate mean­ing­ful out­per­for­mance are ac­tu­ally sup­ported by ev­i­dence. Given Berkshire’s size, its enor­mous cap­i­tal base, the ma­tu­rity of many of its busi­nesses, and the change in cap­i­tal al­lo­ca­tor, I think those are en­tirely rea­son­able ques­tions to ask.”
  Well stated. I agree. I'll re­peat a point I've made be­fore, using XOM as an ex­am­ple. They un­der­stand they are a "Price Taker" in terms of prices. They don't con­trol the com­mod­ity prices that dom­i­nate their busi­ness. In the same sense, BRK is a "Market Taker." They don't cre­ate new op­por­tu­ni­ties, they can only se­lect from what the mar­ket of­fers. And they his­tor­i­cally re­strict them­selves to large, es­tab­lished, busi­nesses with a track record. They don't fol­low the path of large PE busi­nesses of buy cheap, fix up, sell, and re­peat. So BRK has an in­creas­ingly smaller Mar­ket from which to choose be­cause of size and phi­los­o­phy.
  What Exxon has done is to mas­sively re­or­ga­nize their cor­po­ra­tion, sav­ing circa $16+ bil­lion an­nu­ally with iden­ti­fied paths to $20 bil­lion by 2030. They are also cre­at­ing new prod­uct lines from scratch, find­ing new uses for the hy­dro­car­bons they pos­sess and find. In one pre­sen­ta­tion, they ex­pect prof­its from these new busi­nesses to be equal to the whole fuels busi­ness by the mid-2030's.
  Exxon could do this be­cause their busi­nesses are re­lated, so much eas­ier to com­bine and re­struc­ture. They also have an in­dus­try lead­ing Tech­nol­ogy or­ga­ni­za­tion fo­cus­ing on both im­prov­ing ef­fi­cien­cies in ex­ist­ing busi­nesses and cre­at­ing new ones.
  BRK does­n't have these ca­pa­bil­i­ties, You can't com­bine a rail­road and an en­ergy busi­ness to save money, they must re­struc­ture within them­selves. Greg is mak­ing some progress in adding more struc­ture within re­lated busi­nesses——nec­es­sary for sig­nif­i­cant fu­ture con­sol­i­da­tions to re­duce costs. And he's also pres­sur­ing on more com­pet­i­tive re­sults from sig­nif­i­cant busi­ness seg­ments. But, given the his­toric stand­alone struc­ture of how BRK op­er­ates, it isn't going to be pos­si­ble to re­duce costs as sig­nif­i­cantly as Exxon. It's going to be a long, hard, grind. His job is far, far harder than that of the Exxon CEO. And there is the issue of pre­serv­ing the Berkshire cul­ture as judged by a hand se­lected board with two of Buf­fet­t's chil­dren.
  What I've done is to fol­low Munger's ad­vice and re­struc­ture my BRK ex­pec­ta­tions. Cap­i­tal gains taxes from decades of own­er­ship pre­clude port­fo­lio changes. But that will not be an issue for much longer at my age——as­sum­ing step-ups still exist on pass­ing. What I've told my fam­ily is maybe think of BRK as a tax de­ferred bond with some growth, and con­sider how much of the port­fo­lio to keep. It ac­tu­ally has lim­ited abil­ity to change sig­nif­i­cantly un­less it can more ag­gres­sively com­pete for in­vest­ment, al­beit at higher risk. Still, it's a good safe hold. And pres­sures are build­ing for an­other fi­nan­cial cri­sis that could offer bet­ter mar­ket op­por­tu­ni­ties. I'm not giv­ing up on BRK, but I am ad­just­ing ex­pec­ta­tions.
  OTOH, I think XOM will adapt to the emerg­ing world as it has demon­strated. And that O&G will re­main fun­da­men­tal to civ­i­liza­tion ex­tend­ing well into our grand­chil­dren's lives. Maybe some­where be­tween a safe bond over time with some new growth op­por­tu­ni­ties.
  In­stead of say­ing "beating up on Greg" I should more ac­cu­rately say "try to re­al­is­ti­cally un­der­stand where BRK is and what he faces."