Warren Buffett, stock-picker extraordinaire? Not quite
As Berkshire Hathaway's Warren Buffett prepares to retire, most tributes focus on his reputation as the world's greatest stock-picker. (Disclosure: I own shares in Berkshire.)
However, the truth is more nuanced.
Buffett made many brilliant investments, but it wasn't all plain sailing. The last decade saw some expensive missteps, like Kraft Heinz, Precision Castparts, and a $4 billion loss on airline stocks.
One pick – Apple – made all the difference. Without that position (largely credited to Berkshire's Todd Combs), the Market Sentiment blog notes that Berkshire would have 'significantly lagged' the S&P 500 over the past 10-year and 20-year periods.
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It's hard to isolate the performance of Buffett's stock picks, but in 2018 Discipline Funds founder Cullen Roche estimated that they lagged the S&P 500 by about 2 per cent annually over the prior decade, suggesting Berkshire's private businesses did much of the heavy lifting.
Buffett's real edge was access to stable, long-term capital. Thanks to the steady float from Berkshire's insurance businesses – premiums collected up front and paid out later – he could invest with low-cost, low-risk leverage.
A widely cited paper by AQR Capital Management found his performance largely reflected exposure to high-quality, low-risk, value stocks, amplified by leverage (around 1.6:1) and disciplined execution over decades.
Buffett often urged ordinary investors to stick with index funds. That was good advice. His success wasn't just about picking stocks: it was about building an investment vehicle few could ever hope to imitate.
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Irish Times
5 hours ago
- Irish Times
Trump warns Musk of ‘very serious consequences' if he backs Democrats
Donald Trump warned Elon Musk that he faces 'very serious consequences' if he funds Democratic candidates following the pair's epic public bust-up this week. The warning, delivered in an interview with NBC News set to broadcast on Sunday, follows days of feuding and threats after Musk called Republicans' budget legislation an 'abomination'. Mr Trump told interviewer Kristen Welker his relationship with the tech mogul was over and warned Mr Musk against choosing to fund Democrats after spending close to $300 million (€355 million) in support of Mr Trump's re-election last year. 'If he does, he'll have to pay the consequences for that,' Trump told NBC News. 'He'll have to pay very serious consequences if he does that,' he said. READ MORE [ Keith Duggan: Bromance descends into jaw-dropping feud Opens in new window ] Mr Trump was also asked if he had any wish to repair his relationship with Musk. 'No,' he said. Asked if he thought their relationship was over, he said, 'I would assume so, yeah,' and had no plans to speak with his erstwhile sidekick. 'I'm too busy doing other things,' Mr Trump said. 'I have no intention of speaking to him.' Elon Musk with President Donald Trump during a joint news conference in the Oval Office of the White House in Washington, in May. Photograph: Haiyun Jiang/The New York Times But he predicted that the spat had helped to unify the Republican Party around him, saying the 'party has never been united like this before. It's never been. It's actually more so than it was three days ago.' Mr Musk's opposition to the Republican budget bill, formally the 'one big beautiful bill act', would not, he predicted affect its passage through Congress. The bill narrowly passed the House and is now under consideration in the Senate. However, some conservative Republicans share Musk's concerns about the need for significant spending cuts and are considering making changes. The bill extends Trump's 2017 tax cuts and includes new spending for border security and the military. Republicans aimed to offset these costs with cuts to programmes such as Medicaid, food stamps and green-energy tax credits. Projections from the Congressional Budget Office and independent analysts indicate that the bill would add between $2.3tn and $5tn to the deficit over the next 10 years. White House officials contend that the economic growth generated by tax cuts will offset the increased spending. [ How Trump spat threatens Elon Musk's business empire: 'Nobody on the right or left is gonna buy a Tesla' Opens in new window ] Still, Mr Trump told NBC he is 'very confident' that the bill will pass the Senate before July 4th. 'I think, actually, Elon brought out the strengths of the bill because people that weren't as focused started focusing on it, and they see how good it is,' Mr Trump said. 'So in that sense, there was a big favour. But I think Elon, really, I think it's a shame that he's so depressed and so heartbroken.' And he accused Mr Musk of being 'disrespectful to the office of the president'. 'I think it's a very bad thing, because he's very disrespectful. You could not disrespect the office of the president,' he said. Earlier, Musk deleted a post from X, the social media platform he owns, that asserted links between Trump and disgraced US financier Jeffrey Epstein . Probed on the inflammatory post, Mr Trump said: 'That's called 'old news', that's been old news, that has been talked about for years. Even Epstein's lawyer said I had nothing to do with it. It's old news.' Musk has also retracted a threat to begin 'decommissioning' SpaceX's Dragon spacecraft used by Nasa to ferry astronauts and supplies to the International Space Station. That came after Mr Trump suggested he might cancel SpaceX's federal contracts. On Saturday, the president said he hadn't given the subject any more thought. 'I'd be allowed to do that,' he said, 'but I haven't given it any thought.' Earlier on Saturday, JD Vance told interviewer and comedian Theo Von that Mr Musk was making a 'huge mistake' going after Mr Trump, but downplayed Mr Musk's attacks as being made by an 'emotional guy' who got frustrated.' I hope that eventually Elon comes back into the fold. Maybe that's not possible now because he's gone so nuclear,' the vice-president said. But he reasoned: 'Look, it happens to everybody. I've flown off the handle way worse than Elon Musk did in the last 24 hours.' 'I actually think if Elon chilled out a little bit, everything would be fine,' Vance said. – Guardian
Irish Times
18 hours ago
- Irish Times
The Irish economy grew by 22% over the past year. Yes, you read that right
Ireland's economic data was always going to be a bit special at the start of this year. But Thursday's figures were mind-bending. It is impossible to overstate the extent to which we now stand out in international comparisons. And this is not just a curiosity – it matters. The economy, as measured by gross domestic product (GDP) , was 22 per cent larger in the first quarter of 2025 than one year earlier, according to the latest estimates from the Central Statistics Office . Think about it. The figures suggest that for every €1 of activity last year, there was €1.22 in 2025. Even comparing GDP in the first quarter of this year with the last quarter of 2024, there is a rise of close to 10 per cent – this is roughly the extent of growth across the euro zone over the past decade. Of course this bonkers data is not real, in the sense that it does not reflect what is happening in the underlying economy in which we all live. How could it? As has been long discussed the headline economic data is entirely distorted by the activities and tax planning of a small number of very big US tech and pharma companies. From time to time, this has created huge distortions in the figures. A decade ago, top US economist Paul Krugman famously described a 26 per cent GDP growth rate reported for the Irish economy (later revised up to over 30 per cent) as 'leprechaun' economics . At the time the figures were distorted by massive tax-driven investments by the companies concerned, including Apple, essentially a manoeuvre by the companies involved to try to keep their tax bills down as international rules changed. READ MORE Now, as one observer put it, we are seeing another 'Krugman' moment. This time the reasons are different. Big pharma companies have been rushing product over to the US to try to get drugs and key ingredients into the market before Donald Trump announces tariffs on the sector. This has led to a surge in exports, feeding into the GDP data. Many of these are manufactured here – and some are made elsewhere but organised by Irish subsidiaries and so also show up in our figures. And so we see a massive surge in Irish GDP in the first quarter of this year. A big – temporary – decline in pharma exports in GDP will follow at some stage, as the firms involved must now have massive stocks jammed into every free warehouse in the US. Much will depend on how the tariffs story plays out. [ Welcome (back) to the era of Leprechaun economics Opens in new window ] Whether Krugman renews his leprechaun offensive or not, let's not pretend this won't be noticed. Ireland's GDP data is not some irrelevance in a quirky economic corner. The amounts of money being moved through Ireland are now enormous. Daniel Kral, chief economist at Oxford Economics , calculates that Ireland – which accounts for 4 per cent of the euro zone economy – accounted for half its total growth over the past year. Analysts have taken to looking at the figures 'excluding Ireland'. How do we pull back from all of this to judge the underlying health of the economy? Total demand in the domestic economy – adjusted by the CSO to remove the multinational factors - rose just 1 per cent over the year. But we need to look under the surface here, too. Consumer spending, a good measure of how we feel, was up by a decent 2.5 per cent. But the overall figure was dragged down by a fall in business investment, presumably reflecting the international uncertainty. So households continued to spend in the first part of the year, but businesses are taking a wait-and-see approach to big capital spending. This is likely to be reflected in the jobs market as the year goes on – and here AI is also changing the game in many sectors. Consumers may get more cautious too. Uncertainty is starting to slow the economy and this is a trend we need to watch as the year goes on. The piece of data that seemed a bit out of line this week was a 30 per cent fall in corporation tax in May compared with the same month last year. This was affected by the comparison with a strong May last year – which the Department of Finance suggests was boosted by once-off factors. Two of our biggest taxpayers, Pfizer and Microsoft – pay significant amounts of tax that month. But the key early indicator for most of the big companies is June – and what happens here will give a good pointer for the year as a whole. The figures do underline one point. It is our huge reliance on the opaque affairs of four or five massive companies – and our exposure to the sectors they operate in, their own performance and complex decisions on how their tax structures are set up. Our latest bout of data exceptionalism again puts Ireland in the spotlight, when it would have been better to keep the head down. It underlines the outsize take Ireland is getting from pharma and tech activity in the EU – both contentious points in the White House. Notably, the US added Ireland to an economic watch list this week, based on the size of our trade surplus. We are very much on the radar in Washington. Our corporate tax take and manufacturing base are looked on enviously not only from the US , but from elsewhere in Europe. [ 'No long-term commitments to anything' – Ireland's economy is experiencing a silent slowdown Opens in new window ] The advance shipping of products again focuses attention on the scale of activity and tax planning in Ireland by big pharma companies. And this causes a rollercoaster of cyclical activity. But what really counts is longer-term, structural issues. 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Irish Times
a day ago
- Irish Times
‘Nobody on the right or left is gonna buy a Tesla' - the Trump spat threat to Musk's business empire
What began as Elon Musk's embrace of right-wing populism has become a defining – and potentially harmful – chapter in his business career. By endorsing Donald Trump's MAGA movement and far-right parties in Europe, Musk alienated a big portion of his original customer base, eroding Tesla's brand , sales and market share around the globe. Then came this week's rupture: a personal and public break-up with Trump that prompted threats of retaliation from a man with control over the world's most powerful government. By simultaneously burning bridges with both his customers and now the political movement he funded and amplified for months, Musk now faces a rare convergence of threats: collapsing brand loyalty, shaky revenues, and mounting legal and regulatory risk. Tesla's sales are already stumbling under the weight of partisan baggage. SpaceX, long seen as a strategic national asset, is facing new scrutiny as political winds shift. And the green shoots at X – Musk's $44 billion 'free speech' experiment – that were fuelled by Musk's proximity to the White House and the ad dollars that followed, may soon disappear. READ MORE 'Elon isn't functioning to the benefit of his shareholders,' said Ross Gerber, the chief executive officer of Tesla shareholder Gerber Kawasaki, which has been reducing its Tesla holdings over the last few years. Speaking on Bloomberg Television on Thursday while the meltdown was still going on, Gerber said Musk's behaviour is leading to the 'dismantling of the Musk empire in real time.' With enemies on both flanks, Musk finds himself at the centre of a storm fuelled by consumer revolt and political hostility. [ Donald Trump 'not interested' in talking to Elon Musk Opens in new window ] [ Trump-Musk bromance descends into a jaw-dropping feud Opens in new window ] 'Nobody on the right is gonna buy a Tesla, nobody on the left is gonna buy a Tesla. Elon is a man without a country,' said Steve Bannon, an outside adviser to Trump who has long been critical of Musk, in an interview. Bannon says he is 'in continual conversations at the most senior levels' of the Trump administration to push them to revoke Musk's security clearance and use the Defense Production Act to seize SpaceX and Starlink on grounds they are vital to US national security. Even if Trump does not take such extreme measures, there is no shortage of retaliatory options for the White House. The president could try to wield the power of agencies like the US Securities and Exchange Commission, the National Highway Traffic Safety Administration and the Federal Aviation Administration to inflict real harm – or even just incessant regulatory morass – on to all of Musk's businesses and the source of his wealth. In just one day, the Musk-Trump spat shaved $34 billion from his personal net worth, the second-largest loss ever in the history of the Bloomberg Billionaires Index of the 500 wealthiest people on the planet. The only bigger wealth hit: his own wipeout in November 2021. Tesla lost $153 billion of market value on Thursday, with shares reversing course on Friday after Musk began to simmer down. Musk has faced deep stretches of pain before. There are flanks of sceptics who have, over the years, called for his impending demise only to be proven wrong by the world's richest man and his cult following of fans and funders willing to throw ever-growing sums of money at his ambitions. [ Elon Musk has damaged himself and shows no signs of stopping Opens in new window ] Most famously, Tesla flirted with bankruptcy only to reverse course and become the biggest electric vehicle seller in the world. Musk's $44 billion purchase of X was widely panned as the company's debt languished on banks' books, only to see those fortunes reversed after Trump's election. 'Musk has a habit of teetering on the edge of destruction and pulling himself back just in the nick of time,' said Nancy Tengler, whose firm holds 3.5 per cent of its growth portfolio Tesla stock, in a Friday interview on Bloomberg Television. Tengler, chief executive and chief investment officer of Laffer Tengler Investments, said her firm has been adding Tesla shares in recent months but now has a 'full position.' 'He needs to dial down the rhetoric and the drama and get back to the business,' she says, as investors own Tesla stock for growth, not for 'the histrionics.' To pull off a rebound this time around, Musk is going to have to convince people to start buying his electric vehicles at a faster clip and reverse the painful sales slide in the US, Europe and around the world. He is also going to have to attract riders to his new robotaxi service in Austin as the company makes a gigantic bet on artificial intelligence, robotics and self-driving cars. Musk has lobbied lawmakers to help clear a path for driverless vehicles, something Trump initially endorsed. It is now unclear if the Trump-Musk fallout complicates the regulatory environment for autonomous vehicles and potentially slows the path forward for Tesla's robotaxi network. 'The disagreement will not help Tesla demand but could potentially (temporarily) alienate multiple sides of the political spectrum,' said Morgan Stanley analyst Adam Jonas in a research note entitled 'Well That Escalated Quickly...' Jonas said emotions are 'running high' and that he is sticking to his long-term $410 price target on Tesla's share price but is bracing for near-term volatility and is 'prepared for the stock to give up more.' Other tests in the coming weeks may include a $5 billion debt offering of the billionaire's AI company, xAI Corp, as well as funding rounds for xAI and SpaceX. Musk recently closed a $650 million late-stage raise for his neurotechnology company Neuralink from big investors including Sequoia Capital, ARK Investment Management and Founders Fund. From a legal and regulatory perspective, there is even more at stake for Musk if the Trump administration turns on the billionaire and claws back contracts like the president threatened on Thursday. SpaceX, one of the world's most valuable start-ups with a market value of $350 billion, has received more than $22 billion in unclassified contracts from the Defense Department and Nasa since 2000, according to data from Bloomberg Government. It launches critical national security satellites for the Pentagon and the US is depending on the Musk-led company to develop a spacecraft to put American astronauts on the moon in as little as two years. Musk's vow to decommission its all-important Dragon spacecraft, which ferries cargo and people to the International Space Station for the US, sent shock waves throughout the industry. Following through with the threat, which Musk later walked back, would sever a vital part of the US space program. 'It is untenable to have a CEO of a prime defence and aerospace contractor threaten to shut down services the government has contracted with them to perform,' said Lori Garver, a former Nasa deputy administrator under former president Barack Obama. Garver says Nasa needs SpaceX, but that SpaceX's business model also depends, in part, on the US government. 'Elon has already walked back decommissioning Dragon, because they do require now, as a big part of their business plan, government contracts. But they provide a service for those contracts. So it's a symbiotic relationship,' Garver said. On a more day-to-day basis, government agencies could try to inflict pain on Musk's businesses by delaying everything from space launches to satellite service to robotaxi expansion. Investigations into publicly traded Tesla or the finances of his companies could include the SEC, as well as antitrust probes and Federal Trade Commission interest around social media moderation, data use or AI. So far, Musk and Trump may be trying to at least press pause on the public spectacle. White House officials say Trump plans to focus his attention on inflation and the economy rather than speak to Musk, and insinuated without evidence that the billionaire was agitating for a call with the president. (In a pair of posts on his social media platform Friday morning, Trump intensified his push for Federal Reserve Chair Jerome Powell to lower rates.) As for pulling Musk's government contracts, Trump has not yet pursued any steps to follow through with his threats, one of these people said. He is, however, thinking of getting rid of his Tesla. – Bloomberg
