Like Buffett, Only Better

In one remarkable section of the letter, he brags that he bought a company a couple of days after receiving a fax proposal. I'm sure there was a lot of due diligence done there. At least as much as he did before buying General Re, an reinsurance company whose out-of-control derivatives book, corrupt practices and mishandling of catastrophe-insurance policies have caused investors no end of pain and lawsuits.

So it should really come as no surprise that earnings were down at Berkshire this year. You would expect no different from an operation that appears to obtain no synergies by stitching together a hodgepodge of companies other than to have a chance to brag about what nice people it has brought into its corporate family, and to use their cash flow to make high-rolling gambles -- wrongly, as it turns out -- on the direction of the U.S. dollar. (I explained this in more detail last June in my column How Buffett Tripped Over the Dollar).

It's interesting that this lion in winter was finally prodded by his board to name a successor, a step he has long avoided. Yet Buffett still can't seem to stand the idea of sharing his spotlight of public adoration with another top executive, even if it is the sort of plainly sensible action that shareholders should expect from any leader. The suspense seems Shakespearean and way out of step with prudent corporate governance practices. It is clearly designed to ensure that they not step out of line.

Better Than Buffett

Well, here is my suggestion for the first task of any successor, if he would like to continue the Shakespeare theme: He or she should rip like a Gulf Coast hurricane through the yard sale of a company that Buffett has laid out on his Omaha lawn and sell everything outside the areas in which the company is provably accomplished. Those would be vehicle insurance, candy and furniture retailing, and big-cap equity investing.