Nice article by Buffett:
http://finance.fortune.cnn.com/2014/02/24/warren-buffett-berkshire-letter/
Condensed version: Non-professional investors are better off in a low-cost S&P500 index fund.
Even better, buy BRKB
Kinda misses Buffet's point. Individual stocks have risks that a non-professional investor either doesn't understand or doesn't have the information to know of the risks. Even BRKB has that risk. The best advice is for low cost index funds in your chosen AA.
Not really. Berkshire owns numerous top-notch companies outright. That is much more than their stock investments. How many of your funds can claim that?
We've been watching Berkshire Hathaway since the late 1990s and we've been owners since 2001. Buying BRK shares is still single-stock risk, no matter how good people think the "top-notch" companies may be. Tyco and Enron were also made up of underlying companies, too.
Jeff Matthews' "Pilgrimage" had a number of interesting observations about Berkshire's sacred cows (like Nebraska Furniture Mart and See's Candies). Alice Schroeder used to track some horrifying stories of NetJets on her blog. Kirby vacuum cleaners are facing persistent lawsuits about their sales approach. MidAmerican Energy is killing salmon all over the Pacific Northwest.
Buying BRK shares is just part of a diversified portfolio. Of course I may just be talking down my book so that I can buy cheap shares from the rest of you.
Absolutely great article. A question I"ve had for Berkshire stock, how much of it do you think would change after Mr. Buffet's demise? I hate thinking in that terms, but aside from him and Mr. Munger, how reliable are Berkshire managers?
There'll be a short, sharp drop... unless Caribbean cruises, alcohol, and prostitutes are involved, in which case it'll be a longer, sharper drop. After a few months the share price will start to recover. If/when the board declares a dividend, the share price will soar.
Confusion is tied to BRK's announcement that they'll buy back their shares at 110% of book value. (That's roughly $95/share for the "B" shares, about $15-$20 below the usual share price.) People widely expect that BRK will prop up the price at book value, but that's no guarantee. Part of me wants to keep selling puts around that $95/share strike so that I'm always ready to scoop up a bargain.
That was the whole point of creating BRK-B
The point of creating B shares was to 1) allow gifting without triggering taxes and 2) to stave off competitors who were going to create a trust that sold fractional A shares. Believe me, Buffett has no interest in encouraging retail punting in the stock. B shares have less voting rights, for what it's worth.
The latest reason for splitting the value of the B shares was to allow exchanging them for shares of BNSF when the purchase was tendered. Buffett really hates paying with BRK shares, but he really really wanted to own BNSF.