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Quote of the Day
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
This day marks a significant anniversary for Buffett and Berkshire shareholders. On this day in 1992, shares of Berkshire Hathaway closed above $10,000 for the first time. Also on this day in 2001, Burlington Industries – once the largest textile businesses in the world, declared bankruptcy. The fate of Berkshire compared to Burlington helps prove Buffett’s point in the quote above. Despite both companies starting as a textile manufacturer, one company was willing to “change vessels” while the other attempted to patch leaks and eventually sank.
November 16th – This Day in Stock Market History
November 16th, 1907 -The Panic of 1907’s bottom is in as the Dow Jones Industrial Average closes at 38.82, down from a high of 70.59 in January 1907, a decline of 45% in just 11 months.
The panic began October 15th as Frederick Augustus Heinze attempted to corner the market in United Copper shares. Heinze had used assets from banks that he owned to buy shares of United Copper stock. When shares of United Copper plummeted from 60 to 10, Heinze and his banking empire were wiped out. The bank runs began at Heinze’s Mercantile National Bank, but quickly spread to other financial institutions in New York.
The panic would be one of J.P Morgan’s crowning moments. Morgan was instrumental in organizing several large investments into various banks and trusts to keep them afloat, and even organized a large gold shipment from London on November 6th
Stocks would rebound 11% by the end of the year and return 45.78% in 1908, which at the time would be the best single year return in stock market history.
Source: It Was a Very Good Year: Extraordinary Moments in Stock Market History
November 16th, 1992 – Berkshire Hathaway shares close above $10,000 per share for the first time.
Of course, $10,000 would just be the beginning for Buffett and Berkshire Hathaway. Today shares of Berkshire Hathaway sit around $435,000!
November 16th, 2001 – Burlington Industries Inc, once the largest textile maker in the world and 44th largest industrial company with $1.2 billion per year in sales, declares bankruptcy. The story of Burlington Industries is just another example of how hard it is to maintain a competitive edge in a changing world – A reminder that may be valuable to investors today.
Source: Berkshire Hathaway 50th anniversary book
Best November 16th in Dow Jones Industrial Average History
1933 – Up 4.93%, 4.65 points.
Worst November 16th in Dow Jones Industrial Average History
1932 – Down 3.10%, 2.02 points.
Read of the Day
Our quote of the day comes from Buffett’s 1985 letter to shareholders, and is taken from the following paragraph:
“My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: “When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.” Nothing has since changed my point of view on that matter. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
If you have time you should give the full letter a read: Buffett’s 1985 Letter to Shareholders
Also, if you enjoy Buffett quotes, check out our post: 40 Years of Berkshire/Buffett Quotes which is a compilation of my favorite quotes from each of Buffett’s letters.
<– Go to Previous Day: November 15th, 1867 – A new invention that will change Wall Street forever is unveiled in New York City – The stock ticker.
Go to Next Day: November 17th, 2010 – Warren Buffett writes his “Pretty Good for Government Work” Op-Ed in the New York Times. –>