This episode explores the performance of long-term investments five years post-COVID, focusing on Berkshire Hathaway and Disney. The hosts analyze Berkshire Hathaway's surprising outperformance despite holding a significant portion of its market cap in cash, attributing its success partly to a well-timed Apple investment and Buffett's disciplined approach of quickly exiting underperforming investments. More significantly, the discussion pivots to the interpretation of Buffett's large cash reserves, dismissing the notion that it signals an impending market crash. Instead, the hosts suggest it's a strategic move to prepare for Buffett's eventual succession and ensure Berkshire's continued growth under new leadership. For instance, the hosts highlight the analogy of "more money lost preparing for a crash than in the crash itself," emphasizing the importance of long-term investment strategies over reactive market timing. In contrast, Disney's underperformance over the past two decades is examined, highlighting the challenges faced by traditional entertainment companies in the age of streaming and piracy, with examples of high-budget movie flops like "Indiana Jones and the Dial of Destiny" and "Snow White." The discussion concludes with an analysis of Contour Brands, a surprising outperformer, showcasing its resilience and strong dividend yield as a testament to long-term value investing. This underscores the importance of identifying undervalued companies and maintaining a long-term perspective, even amidst market volatility and industry disruptions.
