Conglomerates always have this problem: become too successful, and the only way to meaningfully move the needle is to acquire large stuff, with the implication that you become the (publicly listed) market, thus an index form of sorts.

...technically this hasn't been true for a while, with tech/AI firms staying private for waaaay longer. Berkshire could have owned a piece of the latest stock mania... but alas, for various cultural and fundamental-value investing won't and wouldn't. #1506664, #1509611 #851506, #974746

Berkshire Hathaway is very important — for both its sheer size and its symbolic position in American business. It is worth over a trillion dollars, making it the 11th most valuable company in the US. The 10 larger companies are all in tech, and all of them (save, arguably, Apple) have been boosted recently by AI or Elon Musk mania.

Berkshire stands for an older, more prudent and far-seeing form of corporate capitalism, based not on technological revolution but enduring economic truths.

"At a feverish moment like this, Berkshire’s example matters.""At a feverish moment like this, Berkshire’s example matters."

Overperformance No MoreOverperformance No More

the idea that the Berkshire model has an edge in long-term value creation is increasingly difficult to maintain. If you compare its rolling 10-year total returns with the S&P 500, the period in which Berkshire consistently beat the index ended in mid-2012. Since then, the two pass the lead back and forth, with the S&P outperforming when animal spirits are strong, as they are now, and Berkshire doing a shade better when sentiment is weak, as in April of last year. Fundamentally, it’s been a 14-year draw, which is starting to be a long time, even by Berkshire’s standards.

Answer #1: it's less volatile than the S&P.

you might think of Berkshire as a no-fee, low-volatility, tax-efficient mutual fund that is very unlikely to out or underperform the S&P 500 over long periods of time. That’s not a trivial recommendation. In fact it sounds like a product I would like to own.

Answer #2: it's an insurer

there is an even less flattering way to read Berkshire’s recent performance: that it trades like an insurer, which is what it is, despite its unusually large investment portfolio. Over the past five years, Berkshire has traded largely in step with the S&P 500 property-casualty index, slightly undershooting it.

Can't be buyer-of-last-resort anymore, either. Plenty of others (Blackstone, Apollo, Middle Eastern money) can do that too:

Berkshire’s days of providing “Friday night money” at exorbitant rates to good businesses in distress are probably over, just as its days of buying “dollars for 50 cents” (unpopular companies with value hidden on the balance sheet) ended many decades ago. Waiting for the next crisis to create opportunities is not the strategy for creating above-average long-term returns.

One way is it can be more active: More aggressive in convictions (e.g., Apple), with concentrated bets. OR abuse its cheap cost of capital -- as opposed to, uh, some others we know #1504544, #1504781... cough, 11.5%.

Berkshire has an opportunity to be a consolidator, rolling up smaller players and giving them an edge in cost of capital. In short, it can become a business-builder as well as a business buyer and manager — a private equity fund but with an infinite time horizon.

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