It was a bad bear market. In the bottom of that bear market, Berkshire invested I think it was $10 million to buy a large stake in the Washington Post newspaper. And that powered his returns for the next decade. At the same time, he bought a half interest in GEICO, and that powered his returns for the next decade. So, coming out of the '73/'74 bear market, he made two unbelievably world-class investments where he would go on to make 10 times his money, 20 times his money. I don't even know how much money he made on GEICO. It's an enormous fortune. So, when a bear market happens, Buffett strikes and makes a killing. 1987 comes along. The crash Casinoslots South Africa. Remember the crash, Buck? Were you alive in '87? Buck Sexton: I was alive and I remember the crash. My dad was a stockbroker at the time. Porter Stansberry: Oh! You do remember the crash. No Christmas that year. Anyway, coming out of that crash, Buffett spent $10 billion – which was about 25% of the entire book value of Berkshire – on Coca-Cola. And if you look at a chart of Coke stock in the '90s, it just goes straight up. Huge, huge win for Berkshire. Okay? Big-time win. Now, there have been two big bad bear markets since the '87 crash. There was the tech crash in 2001 and there was the mortgage crisis in 2008. And my question to you is: what did Berkshire do with its enormous cash loads in those crises? And the answer is: Not a damn thing. There is no GEICO. There is no Coca-Cola. There is no Washington Post. There is no buying Amex at the bottom. There are no great picks out of those crises. He didn't put Berkshire's money into the right public companies. And nobody's called him out on it. And instead he's done things that he said that he would never do. Classic example. He got killed in ConocoPhillips. He bought it at the very top in 2005/2006, and he said publicly that he believed in peak oil. And he got his ass handed to him. I mean, he lost a ton of money. He lost several billion dollars on that investment. And then of course there was the IBM debacle. So the nature of the way that Berkshire makes money has really changed. And a couple of things have happened that are very unusual. So, Buffett said that he would never buy tech stock, and then he plowed $20 billion into IBM and got his ass handed to him. He said he would never buy airlines. But if you look at his top 15 holdings today, you'll find Delta and Southwest. Both airlines. But the bigger thing that changed was that Buffett said he would begin paying a dividend when, in any five-year rolling period, the growth in Berkshire Hathaway's book value did not keep pace with the S&P 500. And that happened about two years ago because of the poor investments in IBM and ConocoPhillips and others. Tesco, a grocery store chain in England: Low-margin grocery store chain. Buffett bought it, got his ass handed to him. So, for years Buffett never ever once underperformed the S&P 500. It's happened regularly, about 40% of the time, since 2000. Why? Because he changed his investment style. He went against the things he already had proven worked.
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