We sold Tesco shares throughout the year and are now out of the position. (The company, we should
mention, has hired new management, and we wish them well.) Our after-tax loss from this investment was $444 million, about 1/5 of 1% of Berkshire’s net worth. In the past 50 years, we have only once realized an investment loss that at the time of sale cost us 2% of our net worth. Twice, we experienced 1% losses. All three of these losses occurred in the 1974-1975 period, when we sold stocks that were very cheap in order to buy others we believed to be even cheaper.
mention, has hired new management, and we wish them well.) Our after-tax loss from this investment was $444 million, about 1/5 of 1% of Berkshire’s net worth. In the past 50 years, we have only once realized an investment loss that at the time of sale cost us 2% of our net worth. Twice, we experienced 1% losses. All three of these losses occurred in the 1974-1975 period, when we sold stocks that were very cheap in order to buy others we believed to be even cheaper.
- Does not risk more than 2% of networth (permanent loss)
Another warning: Berkshire shares should not be purchased with borrowed money. There have been three
times since 1965 when our stock has fallen about 50% from its high point. Someday, something close to
this kind of drop will happen again, and no one knows when. Berkshire will almost certainly be a
satisfactory holding for investors. But it could well be a disastrous choice for speculators employing
leverage.
- 3% chance for 50% drop in MTM - absolutely low
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