What it's all about- a reminder from BRK

Reviewing the annual report of Berkshire Hathaway (BRK) refreshes my sense of desire for owning wonderful companies. At times, the ups and downs of the markets can dull my senses and redirect my attention to the non-essential aspects of business. In addition, most of the conversations with clients are concerned with the same aspects; few wish to dwell on the real long-term underlying businesses. In contrast, Chairman Buffett lovingly looks at the characteristics of his businesses: their histories, their competitive positions and their leadership. BRK is basically like a Russian doll of sorts - businesses creating cash to buy more businesses which buy more businesses. Essentially portfolio management is the same thing, but market prices all too often become the source because they determine the entrance and exit points. In contrast, Chairman Buffett retains his positions - allowing him to focus in a pure way on the underlying and long-term aspects of the business. The Chairman also focuses attention on earnings, rather than dividends and share price movement. And yet, the siren call of the day is dividend yield or stock price movement. Neither of these factors are even mentioned! He focuses on earnings even on his non-controlled companies (read stocks), breaking down the actual earnings he would be receiving if the companies were controlled. This is an important and refreshing exercise for all of us who own stocks because it brings the focus to that which is important. By reviewing what my personal earnings are from a stock position, as if I were the total owner, is a valuable aid in gaining scale.