Sunday, March 1, 2009

Berkshire Hathaway goals

Reading through the Berkshire Hathaway annual report (something that is highly recommended - it's not nearly as dry as it sounds) you quickly run in to the operating goals. Honestly, thinking about them out of context, there's not much else you need to do either on a small scale (a 4 person project, a small business, a career, your family, etc) or on the scale they operate in order to be successful:

(1) maintaining Berkshire's Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources of earnings and cash;
(2) widening the "moats" around our operating businesses that give them durable competitive advantages;
(3) acquiring and developing new and varied streams of earnings;
(4) expanding and nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.

Substitute credibility or trust for finances for some scenarios, other valuable qualities for others, or obviously keep it finance-related for economic things, but I don't think there's a lot more to it from what I've seen so far.

The devil's in the details implementing this game plan, surely, but I think it's important to realize/remember that the game plan itself is not complicated.

As I read through more of it, some other gems:

- Beware the investment activity that produces applause; the great moves are usually greeted by yawns.
- Beware geeks bearing formulas (as a geek, I agree)
- Regarding municipal finance: "The gap between
assets and a realistic actuarial valuation of present liabilities is simply staggering."