Berkshire Hathaway (BRKA or BRKB) – 03-09-2009
The infamous Berkshire Hathaway, aka Warren Buffett’s company. If you can’t afford the A shares you could always go for the B shares, which are exactly the same aside from voting rights. You’d need a whole lot of BRKA for your vote to matter anyway, so no biggie. So the good points of BRKA: they’ve been making some incredible deals and lowball offers that only Buffett could pull off; Buffett will continue to make those kinds of deals as the economy drops and more companies need it; Buffett’s previous picks have been generally good and are still solid (relatively). And the bad points: they have way too big of a stake in most companies to be able to dump losers; too big to maintain growth rates; Buffett (and Munger) will not be around forever.
I always wonder what effect it will have when Buffett and Munger are no longer running BRKA. On the one hand, he’s been grooming his successor for a while now, but on the other hand, it’s pretty hard to replace Buffett and Munger even if you’ve been training for decades. I’m sure the short term effects the day Buffett steps down will be tough to swallow either way. No single person means more to their company than Buffett, aside from possibly Steve Jobs.
Having said all that, if you were just going to be throwing money at the S&P 500 or some other index fund, you should probably consider BRKA when the market rebounds. It’s not going to diverge from the general market direction, but it tends to outperform the market enough that it’s worthwhile. That means the play is to watch this and just buy it whenever there’s a confirmed long term bull market and dump it whenever there’s a bear market. Pretty simple, right?
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