Warren Buffett used the ‘Mona Lisa’ to explain why art is a terrible investment – but then compared Berkshire Hathaway to an art museum

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Warren Buffett.
  • Warren Buffett dismissed art as a bad investment almost 60 years ago.
  • France could have made a quadrillion billion dollars if it had invested instead of buying the Mona Lisa, he said.
  • Buffett described investing, valuing and building businesses, and Berkshire Hathaway as an art.
  • See more stories on the Insider business page.

Warren Buffett referred to one of the most famous paintings in history to explain why art is a bad investment.

The billionaire investor touched on the subject in his 1963 letter to clients of his Buffett partnership, the investment fund he ran before turning to Berkshire Hathaway. He wanted to convey the power of compound interest in building wealth over time.

Buffett noted that Francis I, the former King of France, purchased Leonardo da Vinci’s “Mona Lisa” in 1540 for 4,000 gold crowns, the equivalent of $ 20,000. If the monarch had invested that money in an investment generating a modest after-tax return of 6% per year, the country’s coffers would be overflowing by more than $ 1 quadrillion in 1963, or 3,000 times its national debt, the investor pointed out. .

Meanwhile, the “Mona Lisa” was insured for a value of $ 100 million in 1962, or more than $ 900 million in today’s dollars.

“I hope this ends all discussion in our household about any purchase of paints that can be considered an investment,” Buffett joked. His comments resurfaced this month Courtesy of Dividend Growth Investor, a Twitter user who tweets about investing.

Famous Berkshire boss Hathaway may not think of art as an interesting property, but he does consider his work to be an art form in a way.

“Investing is the art of putting money aside now for a lot more money later,” he said at Berkshire’s annual shareholders meeting in 1998. He also described the valuation of companies as an “art” at the meeting the following year.

Additionally, Buffett likened starting a business to building a board. He used this analogy to persuade National Indemnity co-founder Jack Ringwalt to sell his insurance company in Berkshire in 1967, he recalled at the 2000 annual meeting.

The investor asked Ringwalt if he would be happy for a trust agent to dispose of his life’s work the day after his death. He reassured the entrepreneur that Berkshire would respect and not sell his business, and also allow him to continue “painting” it.

“We won’t go in and tell you to use reds instead of yellows or something,” Buffett reminded Ringwalt. “So even though it’s a masterpiece now, you can keep adding to it.”

The Berkshire leader took the metaphor even further, defining his conglomerate as a collector of fine art.

“We like to think that we are the Metropolitan Museum of Business and that we can have truly exceptional creations reside in our museum,” he said.

Buffett also described Berkshire – which has dozens of subsidiaries, including Geico and See’s Candies as well as multi-billion dollar holdings in Apple, Coca-Cola and other state-owned companies – as its magnum opus.

“I think of Berkshire Hathaway much like a painter considers a painting, the difference being that the canvas is limitless,” Buffett said in 2016.



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