1 year ago 🏆 for day 46, 2019 with 394 words.

Is Amazon the new Berkshire Hathaway?

I really being to think that Jeff Bezos really is modeling his company after the style of Warren Buffett and it's a thought that I have mentioned to others off and on for at least a year now.

Berkshire Hathaway: the investment vehicle for Warren Buffet to allow him to invest the money held for insurance premiums prior to paying them out in claims. Buffets style is to underwrite insurance, invest in stocks and also buy entire companies. Berkshire Hathaway shares are owned by a lot of people on the basis that (a) Warren has proven that he knows what he is doing, (b) almost all of his wealth is locked up in the same shares & (c) Berkshire Hathaway over the long-term always beats the market indexes

Amazon: needs no introduction

Lots of companies buy other companies. Facebook does it, Microsoft does it, Google does it, Apple does it. The difference is that except in a very few cases (Beats for Apple, Nest for Google, WhatsApp & Instagram for Facebook) is that the companies get merged into the parent company.

The difference with Amazon, and this is where they parallel Berkshire Hathaway, is that Bezos buys entire companies and then lets them run themselves. The list of companies owned by Berkshire Hathaway is quite impressive with lots of household names, but also is the list of companies owned by Amazon with plenty of names you would recognize.

Warrens philosophy has always been find a good quality that is run very well, buy it and leave it alone. Trust that the existing management know what they are doing. Don't buy a company that is going out of business cheap because there is a good reason why it's cheap and don't raise money to buy your competitor because that always ends in both of you going under.

The Berkshire Hathaway model seems to be the very one that Amazon is following with the purchasing of good quality companies or services, slapping the "an Amazon Company" slogan on them and leaving them to continue doing what they do well.

And that is why I regard Amazon is the new Berkshire Hathaway.

Full disclosure: I own both AMZN and BRK.B shares and have done so for nearly two decades. I'll sell them when they are no longer a good investment.


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By Yorick Phoenix 🏆

Chief WriteTogether Bug Finder & character stringer. Generally to create computer code, but sometimes actual words and paragraphs. Listens to lots of music, takes lots of photos, & invests in stocks for the long haul.

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