Morgan Housel

We could easily flip this company next year for more than we paid for it.

We could easily lay off half the staff and squeeze more net income out of it.

We're not gonna do that.

We're gonna keep this as it is and do it.

And because of that, you had businesses that would sell their company to Berkshire for less than they could have gotten from Blackstone or KKR.

Because if you are particularly a family business,

who built your business up over the years, and this was your baby.

Did you want to sell it to Blackstone for an extra 10 million bucks and have them rip it to shreds or sell it to Berkshire for a little bit less and know that he was going to nurture it for several generations?

I think that's true.

And a lot of it was not altruism.

It was he knew that he would be able to get the best terms and the best deals if he had that level of trust.

And so a lot of it was morals of just doing the right thing.

But a lot of it was this was going to accrue to him personally and to Berkshire over time.

Sure.

And I think that's where you get the best results when it's like everybody's winning here.

the the companies that would sell to him were like this is this is where we want our baby to go and buffett himself was going to get it at better terms and have better flow than anyone else doing it also important to point out this should not take away from any of his success but it's important to point something like this out buffett once pointed out that over the course of his career he has purchased 500 stocks and he made the vast majority of his returns on 10 of them and

And Munger once pointed out that if you look at all of Berkshire's deals over the 50, 60 years that it was doing it, if you remove the top five, its returns fall to average.

And so this is true for almost any endeavor that you look at.

The vast majority of Berkshire's returns, and whether it's Berkshire buying whole companies or Buffett as basically a hedge fund manager back in the day, the huge majority of the success comes from a very small minority of what he did.

I think there's probably two takeaways from it.