The Financial Archive

A newsletter from the past.

Link to newsletter: The Financial Archive

I’m starting a newsletter called “The Finanical Archive”. Subscribers will receive articles from old newspapers, journals, etc. (Monday - Saturday), with occasional commentary from yours truly.

The investment community is definitely up to speed. News alerts are seemingly endless, and millions of eyeballs are glued to security price fluctuations. Each subtle tick, up or down, produces a level of neuroticism in the market.

The Financial Archive takes a few steps back. It’s old content — with an infinite shelf-life.

"There is no better teacher than history in determining the future."

— Charlie Munger

A glimpse of what you’ll get (newspaper form at the bottom):

What’s wrong, Warren? — by Andrew Bary (December 27, 1999)

“Berkshire's down for the year, but don't count it out

AFTER MORE THAN 30 years of unrivaled investment success, Warren Buffett may be losing his magic touch. Shares in Buffett's Berkshire Hathaway are set to experience their first annual decline since 1990 and their worst year of performance, relative to the Standard & Poor's 500 Index, since Buffett took control of what had been a struggling New England textile maker in 1965.

At around $54,000 a share, Berkshire's Class A stock is off 23% in 1999, against an 20% return for the S&P 500 (including dividends). Berkshire has been hurt this year by weak operating results at its core insurance operations and by a rare annual drop in the company's famed investment portfolio, which includes such stocks as Coca-Cola, Gillette and American Express.

But there's more to Berkshire's weak showing than just the operating and investment performance. To be blunt, Buffett, who turns 70 in 2000, is viewed by an increasing number of investors as too conservative, even passe. Buffett, Berkshire's chairman and chief executive, may be the world's greatest investor, but he hasn't anticipated or capitalized on the boom in technology stocks in the past few years.

Indeed, Buffett has even started taking flak on Internet message boards. One, contributor called Berkshire a "middlebrow insurance company studded with a bizarre melange of assets, including candy stores, hamburger stands, jewelry shops, a shoemaker and a thirdrate encyclopedia company [the World Book]."

Not everyone shares those sentiments, however. "I don't think Buffett has lost it," says Jim Engle, chief investment officer at Wood Struthers & Winthrop, a New York investment firm owned by Donaldson Lufkin & Jenrette.

"Berkshire offers an incredible investment opportunity for those with a long time horizon."

Adds Peter Russ, an analyst at Fairholme Capital, a New Jersey money manager that holds Berkshire stock: "Berkshire's market value is less than Yahoo's, yet Berkshire could earn $2 billion after taxes in 2000, while Yahoo will be lucky to make $200 million." Berkshire now is valued at $83 billion, while Yahoo has a capitalization of $120 billion. Russ believes that Berkshire could double over the next several years.

Bulls say the stock now looks very attractive, trading at around 1.5 times its book value and considerably below its March high of $81,000. Several Berkshire admirers told Barron's that they believe the stock's "intrinsic value" (a Buffett term meaning the essential worth of Berkshire's businesses, based)…”