What is going on? Both Warren and Greg have said that the company culture and investing style will remain the same. However, for 15 years they have known that their value style of investing was underperforming the S&P. Even corrections which allow purchases at low prices doesn’t help much because these companies make take years to show their true value.

In recent years Berkshire Hathaway’s performance was about equal to the S&P because they held 50% AAPL. Now they have sold 60% of the position and are looking for new investments. Since AAPL was about 12 percentage points above the S&P over the past 15 years that means the core holdings were about 12 percentage points below the S&P. With the current stock broadening that is going on, the core holdings are probably a little better.

AAPL was the volatile part of the portfolio. They need a new volatile component to replace it. Without a volatile component it is almost impossible outperform the S&P. The best volatile component I know of is TQQQ. In aggregate it acts like the next AAPL forever. TQQQ is twice as effective at raising portfolio performance as AAPL. The cap weighting of TQQQ holds the best 1.5% of all stocks for long term investing.

The purchase of 20% TQQQ would raise the performance of the portfolio 10 percentage points which would put the portfolio performance slightly above the S&P. Without some change in the investment strategy, Berkshire Hathaway will not be as attractive an investment as in the past.