Buffett has been deemed the most successful of all time by many, and when he shares advice, people tend to listen. He has been in the spotlight since 1965, sharing his thoughts and strategies, and now investors seem to generally focus on high return, low profit, and low risk businesses to invest in.
After having bad luck and small returns from textiles in Berkshire’s beginnings, Buffett changed his focus. To date, half of Berkshire’s portfolio is made up of big names— Coca-Cola, Kraft Heinz, Wells Fargo, and IBM to name a few.
“I didn’t buy Coke with the idea it will be out of gas in 10 years or 50 years… So what we really want to do is buy businesses that we would be happy to own forever,” Buffett once said.
Buffett likes oligopolies— the market being shared by a small group of either investors or sellers— but is it limiting our competition or economic growth?
Over the last several years, there’s evidence that managers are trying to meet expectations set by Buffett. 600 of America’s top 900 industries, that’s 2/3 of them, have concentrated in the last 20 years. And, since 2008, there have been some of the largest mergers in the countries history, totaling somewhere around $10 trillion worth. While Buffett may personally advocate reinvestment, only 45% of profits from the S&P 500 firms is being reinvested. Instead, the focus is largely on cutting expenses and increasing safety margins.
I think that a lot of Buffett’s techniques, if implemented properly, could help America’s economy— owning shares for long periods of time, for example. But is avoiding risks a good thing for our economy, or could it be hurting growth? Share your opinions with me in the comments!