eli5: How did Berkshire Hathaway amass billions of dolllars?
In: Economics
by starting out as a large firm and then investing well/luckily.
the company came into existence as a fusion of to textile companies and thus was already pretty big from the start (and made money).
then when Warren Buffett essentially took over the company, he was smart enough to see that profits from textile production were shrinking and lucky enough to find a good (and cheap) insurance company and bank to take over with the funds the company still had.
these 2 made a ton of profit and over time the Berkshire Hathaway leaned more and more into investing in existing companies.
like other investment fonds they try to find undervalued companies – however only ones that are making a profit already or soon – but unlike them they apparently DONT try to break them apart but instead just “fund” the company and let them follow their current path.
in the end, smart investments and the fact that they’ve now been around for decades and have relied on those long-term investment more than most other companies made them huge
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