Warren Buffett's annual messages to the shareholders of Berkshire Hathaway are always full of interesting observations about the business world. This year he treated us to a brief explanation of how the tax code, the predatory instincts of Wall Street, and the frailties of human nature create an opportunity for him to make money:
At Berkshire, we can — without incurring taxes or much in the way of other costs — move huge sums from businesses that have limited opportunities for incremental investment to other sectors with greater promise. Moreover, we are free of historical biases created by lifelong association with a given industry and are not subject to pressures from colleagues having a vested interest in maintaining the status quo. That’s important: If horses had controlled investment decisions, there would have been no auto industry.