Berkshire Hathaway vs. Google

So many ingredients go into winning an NCAA basketball championship. It takes heart, determination, and often a healthy dose of luck. But at the core, it takes a highly skilled, well-balanced team that can adapt to conditions and competitors to win consistently.

When it comes to stocks, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) has exactly the kind of team that can win consistently regardless of market conditions. Led by the legendary Warren Buffett and his point man Charlie Munger, this team makes other publicly traded companies look like lemonade stands.

Consistent returns
Berkshire has delivered. Since 1965, Berkshire has grown its shareholder equity, with only a single year where it took a step back. Over that time, Berkshire's total growth in book value has been 400,863%, easily surpassing the S&P 500's 6,840% climb.

How does it do it? You might as well ask how Michael Jordan did what he did. The genius of Warren Buffett has been taking the capital earned by Berkshire's diversified set of businesses and putting it to work where it will earn the best returns -- whether that's reinvesting it in that business, acquiring new businesses, or investing it in stocks or bonds. Buffett's orchestration has turned Berkshire Hathaway from a failing textile business to an all-star group of insurance, manufacturing, retail, utility, and service businesses.

Returns yesterday, returns today, returns tomorrow
But with that 400,863% gain in the past, is the ride over? Not by a long shot. In 2007, Berkshire Hathaway reported an 11% jump in its book value, exceeding the 5.5% gain in the S&P 500 and bringing it to an impressive $121 billion. And for those who are more focused on returns, consider that Berkshire's stock is up 21% over the past year, while the S&P has fallen 5%. That's right, while quality companies such as AIG (NYSE: AIG), Citigroup (NYSE: C), and Goldman Sachs (NYSE: GS) have been sinking, and others like Bear Stearns (NYSE: BSC) have disintegrated, Berkshire's stock has risen.

And it's only going to get better. Currently Buffett is sitting on a cash horde of $44 billion -- or $150 billion if you include Berkshire's stock and bond portfolios -- that will allow him to watch the current market massacre and patiently wait to get his hands on some of the best deals that the market has seen in a long time. This will sow the seeds for decades of further outperformance.

Googling a better investment
Google (Nasdaq: GOOG), meanwhile, is a great company with a nice business. But how much can we count on its staying power? It wasn't all that long ago that Yahoo! (Nasdaq: YHOO) was considered the 800-pound gorilla of Internet search, and yet today it's playing second fiddle -- at best -- to Google. Can we be sure that the same fate won't befall Google?

In the end, when you consider the long history of immense success at Berkshire, along with Berkshire's incredible business diversity, Google can start to seem like, well, child's play. In other words, no matter how much promise a sixth-grade basketball player has, you're not going to bet on him beating LeBron James one-on-one.

So sure, maybe it's not a bad idea for some investors to throw some "fun money" in the direction of Google, but for those seriously constructing a portfolio, you won't find a better core holding than Berkshire Hathaway. So go ahead and click over to CAPS and let the CAPS community know that you agree that Warren Buffett and Berkshire Hathaway are head-and-shoulders above the do-no-evilers over at Google.

More of the Berkshire beauty:

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Berkshire Hathaway is a pick from Inside Value and Stock Advisor. The Motley Fool owns shares of Berkshire Hathaway. You can savor the flavor of any of The Fool newsletters free for 30 days.

Fool contributor Matt Koppenheffer does not own shares of any companies mentioned. The Fool's disclosure policy pities the fool that doesn't vote for Berkshire Hathaway.