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No. of Recommendations: 29
In one sense, Berkshire is the ideal very-very-long-hold investment
for someone with a fairly high tax rate on dividends and/or capital gains.
The ability to accumulate wealth with the uncallable leverage provided
by deferred tax liability (personal, not within the company) is huge.
The market price can be wrong for many, many years at a time, but still
has better odds than most firms of outperforming the market than most,
so if almost-certain modest outperformance is your goal, you're golden.

However, this is a bear case too: only if you are in this
situation is Berkshire the ideal foundation of your portfolio.
If you don't have cap gains tax, switching into and out of things
cyclically as they gradually go in and out of fashion might (might)
get you substantially better returns, and maybe (maybe) even steadier ones.
If you have a shorter time horizon, you may be unable to wait the
decade that the firm might remain undervalued by Mr Market, which would be annoying.
If you need current income, it's not appropriate at all.

So, these aren't a bear case per se, any more than saying that a
turtle is "worse" than a gazelle because it's slower. If you need something
that can resist teeth, turtles are much superior. If Berkshire's properties
fit the requirements of your portfolio, it's very hard to beat.
If they don't, then one has to look elsewhere. The main strengths
of Berkshire are that it is not going to go bust, and that it will
certainly outperform the broad market by a modest but meaningful amount
in the next decade or two at least, albeit irregularly based on market price.
But for many investors, even very rational ones, those aren't enough.
The main thing is not to decide whether Berkshire is good or bad, but
to take a very sober assessment of whether it suits your portfolio needs,
based on whether its unusual strengths match the gap you need filled.
Or, the gap you want filled, which may be different.
If not, it's a bad investment choice....for you.

Jim
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