Quora Answer: Is Berkshire Hathaway Still a Good Investment Given the Age of the Founders?

The following is my answer to a Quora question: “Is Berkshire Hathaway still a good investment given the age of the founders?”

Yes.  Warren Edward Buffett and Charles Thomas Munger do not run the company by themselves.  They have a capable team that they have trained up, and who have imbibed the values and investment philosophy of the founders.  Also, the underlying assets under management of Berkshire Hathaway are, for the most part, well managed and continue to give value.  I think the only misstep was the merger of Kraft-Heinz in collaboration with 3G Capital.  I do not believe in their management philosophy of zero-based budgeting.  It is a ridiculous concept, and it is being found out in Kraft-Heinz.

One of the primary criticisms of zero-based budgeting is that it is impossible to justify expenditure on intangibles, such as for staff morale, training, advertising and goodwill.  It is a very short-term look at the expense of the long-term growth of the company.  It is a managerial fad, and it cost Berkshire Hathaway a lot of money in the Kraft-Heinz impairment.

That being said, I am confident that Warren Buffet and his team have learned well from this, and they will act accordingly.  One of the reasons why Berkshire Hathaway have been successful is because they have been willing to learn from mistakes in the past.