A letter a day!
Letter 16# 1967 ( Half yearly letter)
Key learning:
1)When you own a substantial part of the business ( Controls category as per Buffett) and the business is facing difficulties, you may experience a drag in the performance in the short term. During this time, the Generals category will drive the performance.
“However, B-H(Berkshire Hathway) is experiencing and faces real difficulties in the textile business, while I don’t presently foresee any loss in underlying values. I similarly see no prospect of a good return on the assets employed in the textile business. Therefore, this segment of our portfolio will be a substantial drag on our relative performance (as it has been during the first half) if the Dow continues to advance. Such relative performance with controlled companies is expected in a strongly advancing market but is accentuated when the business is making no progress. As a friend of mine says. “Experience is what you find when you’re looking for something else.”
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