It is common knowledge that Berkshire's 50 Billion dollar loss is due to markdown in valuation of it's portfolio.
The point of the post, is just to highlight the fallacy of the oft repeated idea/quote Rule no 1 of investing : Never lose money, and rule no 2, Do not forget rule no 1.....
Unless one is God or superhuman, no trader/investor can avoid making a loss. No matter, how sure, how careful, how much of a genius one is, no stock market investment is guaranteed to always make money. Losing some money while investing is a part of the process of making money.
Secondly, if one follows the quote in investing and trading, one will limit himself and may miss opportunites out of fear being extra cautious. Losses need to be taken in the stride if one wants to have an above average return.
Now assuming that the markets tank, and the world economy goes into a recession, no matter what Warren Buffet believe, he will have to take losses in his stride till there is economic recovery. That is the cost of doing business.
Having said all this, and even keeping aside the fact that Berkshire Hathway's portfolio has had a negative return of over 20% about 5 times
atleast, even the genius of Warren Buffet could not help avoiding millions of dollars in losses on his investment that have nothing to do with MTM, but due to mistakes made that became clear only later. Among such losses, major ones include loss of 3 billion dollars in Heinz, over 400 million dollars in Tesco, about 900 million dollars in an energy company and about 3.50 billion dollars in Dexter Shoes.
Having said, all the above, I admire and respect Warren Buffet as a person who has made long term buy and hold investing popular. But that quote of not making a loss is something that a trader/investor needs to overcome, without which he will not be able to pull the trigger.
it's mark-2-market. Berkshire is like Mutual Fund, if values of stock portfolio goes down, they have to report it as losses. even though it's paper loss (or profit).