u/One-Event6199

Rate hikes are getting increasingly possible.

Guess which company owns the largest amount of t-bills in the United States?

"The line separating investment and speculation... becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money... They know that overstaying the festivities—that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future—will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

• Berkshire Hathaway 2000 Annual Letter

Despite my activity on this sub, I haven't purchased any new shares of Berkshire since 2021.

Finally pulling the trigger today.

Inverse Reddit has never, ever, ever failed to make me a profit.

• Reddit shitting on Alphabet at $160 saying that search was doomed.

• Reddit shitting on Meta at $120 saying that Facebook is dead & Reality Labs is going to blow a hole through their cash & earnings.

• Reddit shitting on Netflix at $20 (adjusted for split) due to ONE quarter of no subscriber growth saying that the platform was doomed.

• And now, Reddit shitting on Berkshire.

Biggest buy signal I've ever seen.

Bullish!!

From the Buffett Partnership 1960 Annual Letter:

One year is far too short a period to form any kind of an opinion as to investment performance, and measurements based upon six months become even more unreliable. My own thinking is much more geared to five-year performance, preferably with tests of relative results in both strong and weak markets.

Berkshire Hathaway 2012 Annual Letter (Buffett has always asked to be judged on five-year rolling periods. In 2012, for the first time in his career, Berkshire failed to beat the S&P 500 over a cumulative five-year span (2008–2012).

"For the first time in 44 years... the gain in Berkshire’s book value during a five-year period has trailed the S&P. To be sure, we had a 'relative' gain in 2008, 2009 and 2011. But a 50-year-long streak has been broken... Charlie and I have no magic wand to make Berkshire grow at its old rates. If the market continues to advance, it’s a near-certainty we will underperform. We shine only when the tide goes out."

From the Berkshire Hathaway 1986 Annual Letter (the Black Monday crash occurred a year later with the Dow dropping 22% in one day. This was when he started accumulating shares in Coca-Cola):

We continue to find for Berkshire Hathaway very little that is interesting in the way of public securities. This is not due to any change in our personality; it is simply that we have no desire to pay prices that are high in relation to what we think is the intrinsic value of the businesses... We will not swing at pitches just because the crowd is yelling 'Swing!

Berkshire Hathaway 2000 Annual Letter (right as the dot-com bubble burst):

"The line separating investment and speculation... becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money... They know that overstaying the festivities—that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future—will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."

"Many people assume that marketable securities are Berkshire's first choice when allocating capital, but that's not true: Ever since we first published our economic principles in 1983, we have consistently stated that we would rather purchase businesses than stocks"

The Sun Valley 1999 speech:

"The two most important industries in the first half of this century were auto and aviation... and there were 2,000 auto companies. If you’d seen then what that industry would do to this country, you’d have said, 'This is the road to riches.'... But of those 2,000, only three survived... In aviation, the money that had been made since the dawn of flight by all of this country’s airline companies was zero. Absolutely zero."

Berkshire Hathaway 1999 Annual Letter (as tech valuations soared into bubble-like territory):

Even Inspector Clouseau could find last year’s guilty party: your Chairman. My performance reminds me of the quarterback whose report card showed four Fs and a D... My 'one subject' is capital allocation, and my grade for 1999 most assuredly is a D... We have no possibility of eye-popping performance in this environment because we will not swing at pitches just because the crowd is yelling 'Swing!'

Berkshire Hathaway 2001 Annual Letter:

"In the tech-stock arena, many people have discovered that the path to 'the new, new thing' led to a 'the old, old thing': a loss. As the 'Great Bubble' burst... we were reminded that you only find out who is swimming naked when the tide goes out."

Buffett Partnership 1962 Letter:

I would rather have a 10% loss in a year when the Dow is down 20% than a 20% gain in a year when the Dow is up 30%. If you only look at the absolute numbers, you are missing the point of what we are trying to do.

Berkshire Hathaway 2023 Letter:

"There remain only a handful of companies in this country capable of truly moving the needle at Berkshire... and outside the U.S., there are essentially no candidates that are meaningful options. All in all, we have no possibility of eye-popping performance. We will be lucky to slightly beat the average American corporation."

"Though the stock market is massively larger than it was in our early days, today’s active participants are neither more emotionally stable nor better taught than when I was in school. For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants."

Berkshire Hathaway 2008 letter:

"Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns."

Buffett Partnership 1966 letter:

"I have no desire to 'play' the market... we do not buy and sell stocks based upon what we think the market is going to do... we are looking for businesses where we can see a long-term future. The 'active' approach to the market is often just a fancy word for speculation."

Berkshire Hathaway 2017 letter:

"Though markets are generally rational, they occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence... What it does require, however, is an ability to disregard mob fears or enthusiasms and to focus on a few simple fundamentals."

Berkshire Hathaway 1992 letter:

"We've long felt that the only value of stock forecasters is to make fortune tellers look good... If you find yourself in a room where everyone is agreeing with your investment thesis, leave the room. You are likely in a bubble."

Berkshire Hathaway 1994 letter:

"A fat wallet... is the enemy of high returns. We will not come close to our past performance. Our growth in the past was achieved from a much smaller base... Size is the anchor of performance."

Berkshire Hathaway 1989 letter:

"The giant disadvantage we face is size: In the early years, we needed only good ideas, but now we need great big ideas. The 'law of large numbers' is a reality that we cannot escape."

Berkshire Hathaway 2024 letter:

"Berkshire now has a footprint that is very large. We should do a bit better than the average American corporation... but anything beyond that is wishful thinking. We are no longer playing the same game we were 40 years ago."

I have an amazing idea:

• Sell all the Berkshire stock. The stock sucks and hasn't performed, right? We need to make up all the opportunity cost! The market's been on an amazing run!

• Since we think the market is gonna continue this amazing, non-overheated run - we should buy Long S&P 3X or Long NASDAQ 3X and make 3x the amount of money when the market keeps running up.

• Leave Berkshire in the dust while we make some good bank.

• We no longer have to give a f**k about Greg and buybacks and the $400B cash pile.

Someone please correct me if I'm understanding this wrong, with this example:

If I purchase stock for $100 and sell it for $200, I make $100 profit.

Under the current CGT rules, if I held it for over a year, only $50 of my profit gets taxed.

But under the new rules, if CPI went up 5% within that year, then my new cost basis becomes $105 and $95 of my profit gets taxed?

I live with my parents & cannot afford to buy a house. I go to work, I get paid - and then I invest a good chunk of my pay into my stock investments before even giving myself anything because:

1. I don't want to be working until I'm 70/until I die.

2. I want my future kids to have a better financial start to life than I did.

3. I want to invest and grow my money without having to take on substantial amounts of debt.

4. When I die, a small portion of the stock will go to my kids & the rest will be given back to society in some form of charitable foundation or trust, with my children responsible for gradually giving it all away.

And now with these new rules, what the hell is the incentive to invest my income when all gains above inflation are getting taxed?

I'm OK with new rules with regards to property - houses are places to live in, not to collect like a stamp collection.

But man, this is another form of stupidity.

From yesterday's 10-Q:

• Berkshire purchased $16 billion worth of stocks in Q1 2026.
• They also sold $24.1 billion worth of stocks simultaneously.
• Therefore, they were net sellers of about $8 billion of equities.

Berkshire's 13-F filing gets released in about two weeks - so I am very interested to see what new stocks they invested $16 billion in and/or what positions they added to.

My best guess is that the $24 billion worth of stocks sold was Greg unwinding Todd Comb's positions along with Buffett conducting either: further trims to Apple & Bank of America OR potentially capturing some gains from the oil investments that have run up (Chevron & Occidental).

Where do you put that cash to work?

Where do you allocate the capital?

Curious to hear from the folks here.

EDIT: Reading these comments makes me even more confident in Berkshire's decision to hold cash.

What a fantastic woman and CEO, she is awesome. BNSF has been the one Berkshire business I've always struggled to wrap my head around with all the railroad jargon, but she made it really easy to understand. Plus it was a great idea to highlight BNSF's evolution and roadmap/future plans.

Are you part of the church, or the casino?

The conventional narrative around Berkshire Hathaway's underperformance tends to focus on what's not wrong (aka the investment portfolio): Apple is doing fine, the Chevron & Occidental stock positions are up since the Iran War, the Japanese trading houses (Itochu, Marubeni, Mitsubishi, Mitsui, Sumitomo) have been multi-baggers, and the equity portfolio broadly remains a compounding machine.

But fixating on the investment portfolio misses the point entirely. Berkshire is no longer primarily a struggling textiles company buying stocks in order to increase book value. It is, first and foremost, an operating conglomerate. The equity portfolio is the sideshow, unlike when Berkshire was taken over by Warren in the late 60s. The operating businesses are the main event. And the main event is underperforming. Full-year operating earnings for 2025 came in at $44.49 billion, down from $47.44 billion the year prior; a roughly 6% decline. That is what is moving the stock. Not the stock portfolio. As Warren & famed-investor Peter Lynch once said: 'a stock is a part ownership in an underlying business. If the business does well, the price takes care of itself'.

Insurance is Berkshire's largest operating profit driver, and 2025 was the year it began to buckle. Insurance underwriting earnings fell 19.5% year-over-year to $7.2 billion, with operating earnings dropping 29.8% in Q4 alone: the steepest single-quarter decline in years. (got these numbers from CNN)

GEICO is losing the retention war. GEICO is still structurally the low-cost provider in personal auto, maintaining an expense ratio advantage of 7–9 points over peers. But that advantage is now working against it in a cyclically softening market. Rate increases from 2022 through 2024 were necessary but came at the cost of customer retention, and competitors who cut rates are now pulling policyholders back. GEICO's expense ratio rose 2.7 points to 12.4% in 2025, driven by higher advertising and policy acquisition costs as the company spent to claw back lost ground. Compared to its main competitors State Farm, Progressive, and Allstate, which reported improvements in loss ratios ranging from 2 to nearly 10 points, GEICO's loss ratio worsened slightly.

Reinsurance - a pricing cycle turning against Berkshire. The reinsurance division faced compounding pressure. Group-wide insurance underwriting earnings included after-tax losses of roughly $850 million from the Los Angeles wildfires in Q1 2025, which hit both the primary insurance business and Berkshire Hathaway Reinsurance Group. Meanwhile, benign catastrophe seasons elsewhere invited capital back into the market. The reinsurance sector attracted significant increases in available capital from both traditional and alternative markets, leading to significant price declines in property reinsurance. And in casualty lines, claims inflation continued to outpace pricing: this combination means Berkshire, disciplined as ever, is choosing to write less business rather than chase volume at inadequate rates.

BNSF: Berkshire's railroad (the largest non-insurance business in its portfolio), BNSF, is the second major operating driver.

The railroad industry benchmarks efficiency via operating ratio (OR): the percentage of revenue consumed by operating costs. Lower is better. BNSF's 2025 operating ratio was 65.5%, sitting 5.7 behind Union Pacific's 59.8%, a gap that Greg Abel himself flagged in his annual letter. Each percentage point of margin improvement represents approximately $230 million of incremental operating cash flow. The gap to Union Pacific, therefore, represents well over $1 billion in annual earnings power currently being left on the table.

Union Pacific has maintained the industry's lowest operating ratio consistently, operating around the 60% threshold while BNSF continues to trail. BNSF showed a decline in return on invested capital in Q3 2025, while UP and FXE led the industry on that metric. Abel has acknowledged the gap is "too wide" and that closing it will require sustained efficiency and service improvements, but this is a multi-year operational challenge, not a quick fix.

That's why yesterday on a CNBC interview with Sue Decker (Lead Director of Berkshire Hathaway), she pointed out that Berkshire moving forward needs to focus on operations & the operating businesses in order to return capital to shareholders - that's where Greg comes in.

So stop hyper-fixating on the Apple shares & the lack of stock buys. It's the underlying business operations that needs attention. Buying stocks doesn't immediately 'fix' the amount of cash flow Berkshire generates.

Friendly reminder to everyone upset that Berkshire's been hoarding cash while the market moons: you do realise nothing is stopping you from participating in this 'ripping market' using your brokerage account, right?

Bought 2 shares of DHHF today.

Wanted to join along for the ride.

First of all congrats /u/spez & the team for an incredible quarter.

Reddit is the platform I use most. In fact, the only social media platform I use since I no longer use Facebook, Instagram, and TikTok. I've been on Reddit since I was fifteen and I've learned more from this community across more topics than I could begin to list. It's almost weird & coincidental that the platform I've spent the most time on as a user has also become my largest investment as a shareholder. Roughly one-third of my net worth sits in Reddit stock and I have no intention of selling a single share. Zero. None.

As for the results from this morning (or afternoon if you're from the US): The double beat on EPS and revenue is incredible but what continues to stand out to me is the quality of the financials underneath. Gross margins north of 90%, no debt, minimal capital expenditure requirements, and gushing free cash flow generation make for one of the strongest balance sheets/income statements/free cash flow statements I've come across in my investing lifetime. Outside of Berkshire Hathaway, I'd put Reddit's financial discipline up against any U.S. company I follow. The platform is what drew us in, but the financial management is what gives this position its long-term staying power.

Stock price has been volatile for much of the year thus far, but any seasoned & disciplined investor would've known that the market's manic-depressive price fluctuations on this stock created a massive buying opportunity. The stock price was declining but all the business metrics & fundamentals just keep getting better and better. So there was a massive disconnect there. I loaded up at $124, $128, $135 and $140. It was massively undervalued & the growth we read today just proved it. Remember that a stock isn't a lottery ticket, it is a partial ownership of an actual business. I like Reddit as a business. :) (and platform). The better Reddit performs as a business, the more the stock price will appreciate in the long-term regardless of the market's short-term bipolar pricing. Remember, if on any given day the market offers you Reddit at a dumb & silly price like $120 (which will happen occasionally) - you can choose to ignore it. You don't HAVE to sell, nor do you HAVE to buy (I would definitely buy at that price though.)

Anyways to all my fellow long-term shareholders: let's continue along the ride.

Having a field day with my quality US stocks like Google/Alphabet & Visa meanwhile ya'll stuck with a 40% US allocation lmaooooooo