Japan is controlled by powerful families that are hidden from the public. They control banks, insurance companies, and have privileged access to government capital. Rather than seeking formal control, they sell majority stakes to prominent operators, while always secretly holding the reins of power… Porter discusses their investment powers today.
Today, Porter reports that investors are in the midst of unlocking so much value from Japanese businesses that making something like 25x your money in this market over the next decade is almost inevitable. He focuses in on one particular example.
“Lost stocks” are businesses that create incredible wealth, not through the expansion of their equity multiple with the Wall Street marketing machine or by constantly raising new capital. No, these businesses create wealth by their own internal cash generation plus excellent capital allocation.
In today’s Daily Journal, Porter further explains the details of the portfolio he assembled called “Better Than Berkshire,” which mimics the holdings of Warren Buffett’s Berkshire Hathaway, but uses publicly traded companies as replacement for what Berkshire holds.
In today’s Daily Journal, Porter attempts to build a portfolio that’s based on the structure and asset allocation of Berkshire Hathaway’s, but that’s only made up of world-class businesses that, when measured objectively, are better than their Berkshire analogs.
Most people believe they must take risks and take on leverage and do all other kinds of financial wizardry because they’re not as smart as Warren Buffett. But that’s all nonsense. All you must do is buy the biggest and best businesses, in the best industries. That’s all. It’s obvious. And it’s easy.
Berkshire Hathaway’s structure guaranteed investment success while Warren Buffett’s personal reputation made investing respectable. The combination showed, beyond any doubt, that capitalism was more effective than socialism. But since the Global Financial Crisis, Berkshire’s track record has been abysmal.
If you want to become a great investor, learn from two of Warren Buffett’s purchases – his worst and his best. Porter takes readers through the history and numbers of both.
Warren Buffett has long warned that the growing size of his portfolio must, inevitably, begin to negatively impact his returns on invested capital. And that’s certainly occurring – though for reasons that are not obvious to most investors, Porter explains.