Belinda Beresford
The news that 20% of the world’s silver supply had been bought by one company has the potential drama of a Hollywood script, especially since the last time someone tried to make a serious killing on the metal they lost about $1-billion. And the protagonists, Warren Buffett and his company Berkshire Hathaway, have only added star quality to the drama.
Buffett, “the sage of Omaha”, is a phenomenally successful investor, and the United States’s second richest person. Berkshire reported annual compound growth of almost 24% for the 32 years to 1996.
Buffett says, unlike the disastrous 1980 attempt to corner the market, the investment was because silver was underpriced.
If you can’t afford a stake in the company – last week shares were trading at over $53 000 each – you can get a memento. Reminiscent of its origins as a clothing company, Berkshire Hathaway sells a range of leisurewear with the logo of a hand clutching a fistful of dollars.
In the past, Buffett has emphasised his belief in stability and certainty in making decisions. “Our reaction to a fermenting industry is much like our attitude toward space exploration: we applaud the endeavour but prefer to skip the ride. I would rather be certain of a good result than hopeful of a great one.”
Buffett is also blunt on the subject of short-term investors – they’re not wanted. Shareholders who respond to bad news by selling stock “should not own Berkshire shares now, just as you should entirely avoid owning stocks if a crashing market would lead you to panic and sell”.