Berkshire Hathaway

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Berkshire Hathaway

Post by ppnewbie » Fri Dec 31, 2021 12:19 am

Anyone have opinions on brkb? Seems like a no brained for a long term investment at an 8 PE. Feel free to chime in if I’m missing something.
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Re: Berkshire Hathawayx

Post by mathjak107 » Fri Dec 31, 2021 2:40 am

Buffett’s time came and went in the 1980s and 1990s .

Berkshire has lagged just indexing for a long long time , almost 20 years now it lagged a simple total market fund and compared to really good funds like my fidelity contra it did even worse , I fail to see the point of bothering . .

Personally my feeling is if you are going to veer from indexing and have a good portfolio like pp users assume they do , then investing outside it should be so you do better then a total market or s&p fund and over most time frames the last 20 years berkshire has not done that.

In fact it may be more than 20 years but I stopped going back 20 years since vti didn’t go back further
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Re: Berkshire Hathaway

Post by dualstow » Fri Dec 31, 2021 9:30 am

ppnewbie wrote:
Fri Dec 31, 2021 12:19 am
Anyone have opinions on brkb? Seems like a no brained for a long term investment at an 8 PE. Feel free to chime in if I’m missing something.
• Long-term popular choice for those who don’t want to have a ton of dividends in taxable and don’t want to only hold an index.
• I have held it — B-shares only — for a long time and it has served me well although it did stall for a few years.
• There are some risks: Buffett is finding it increasingly difficult to find good deals. Even before that, he has chosen some turkeys like Budweiser and airlines. So stating the obvious: manager risk.
• Buffett and Charlie Munger are old. Will the successors be better or worse? More manager risk.

My overall assessment is that they’re not going to go out of business and I would rather invest in a company like this that seeks value and companies that actually produce earnings than the latest IPO of a company that plans to send a rocket to Neptune. And, I would not make a concentrated bet, even in Berkshire, because of manager risk. Better to hold an index which, while FAANG-heavy, is probably less Apple-heavy than Berkshire!
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Re: Berkshire Hathaway

Post by seajay » Fri Dec 31, 2021 10:17 am

Viable as a another 'index' IMO, has the benefit of no dividends being paid so potentially more tax efficient, at the risk of single stock concentration risk factors, so only appropriate as a partial holding IMO.

Some indexes are purely mechanical, maybe largest x stocks by market cap, individually weighted by market cap. Others are subject to some managerial selection processes, such as the Dow and S&P500 having committees that decide which stocks to periodically eject/replace. Given a range of such choices more often its better to hold some of each than any one alone, diversification reduces concentration risk. A set of BRK, DIA, SPY ... etc. is more inclined to see a compounded outcome that is closer to the better individual case of the set than the worst of the set.

I like the more active management of BRK, and how he builds up/spends cash reserves whilst also having access to a considerable amount of 'free' cash (insurance arm premiums received in lieu of claims being paid). More recently BRK's cash pile has grown to considerable levels, more like a 75/25 stock/cash type blend, such that if/when stocks do dive there's around $150Bn of cash to hand. Useful diversification IMO. But perhaps limited to no more than 10% exposure.

Long term holder, March 2020 when price to book charts were indicating < 1.0 seemed like a good time to add in anticipation that Buffett would also be looking to buy back shares.

Whilst Buffett advocates SPY for his heirs, Munger is happy to suggest his heirs keep BRK shares. A primary risk however is that following their departure what decisions might be taken by their replacements. Some would like BRK to start paying dividends, personally if that were to occur both myself and many others might be inclined to dump their shares.
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Re: Berkshire Hathaway

Post by mathjak107 » Fri Dec 31, 2021 10:20 am

The variable portfolio is the place you want to go for those higher returns .

I cant see buying a stock that has underperformed a simple index fund for 20 years .. i fail to see the logic when already using a conservative portfolio like the pp
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Re: Berkshire Hathaway

Post by Xan » Fri Dec 31, 2021 10:31 am

mathjak107 wrote:
Fri Dec 31, 2021 10:20 am
The variable portfolio is the place you want to go for those higher returns .

I cant see buying a stock that has underperformed a simple index fund for 20 years .. i fail to see the logic when already using a conservative portfolio like the pp
Would it make any more sense to buy a stock that had overperformed the index fund for 20 years? Seems likely it's due to come down to earth, or at least underperform.
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Re: Berkshire Hathaway

Post by dualstow » Fri Dec 31, 2021 11:18 am

Yeah, i’ve seen at least one recent article cautioning against piling on the great performers, as it may be harder for them to keep it up. On the contrary- they have a good chance of lagging.
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Re: Berkshire Hathaway

Post by ppnewbie » Fri Dec 31, 2021 11:58 am

Thanks - considering adding more of it for my VP. I already hold it there and have added to it over the years. Also because he has such a large horde of cash, it feels like I am storing my money in cash that pays 12.5% (8 P/E). Even if it’s not redistributed to me.

Thanks for the input.
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Re: Berkshire Hathaway

Post by mathjak107 » Fri Dec 31, 2021 1:25 pm

Xan wrote:
Fri Dec 31, 2021 10:31 am
mathjak107 wrote:
Fri Dec 31, 2021 10:20 am
The variable portfolio is the place you want to go for those higher returns .

I cant see buying a stock that has underperformed a simple index fund for 20 years .. i fail to see the logic when already using a conservative portfolio like the pp
Would it make any more sense to buy a stock that had overperformed the index fund for 20 years? Seems likely it's due to come down to earth, or at least underperform.
I would still say yes , I would take an index fund any day over berkshire..it is like betting on the long shot thinking after 20 years it is suddenly going to be this better choice
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Re: Berkshire Hathaway

Post by Don » Fri Dec 31, 2021 1:35 pm

Brkb is up about 28% this year and pays zero dividends, making it a nice buy and hold in a taxable account. It's had a fine year but lagged before this. I sold my Amzn to buy it nearly a year ago.
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Re: Berkshire Hathaway

Post by mathjak107 » Fri Dec 31, 2021 1:37 pm

Brbk has lagged for 20 years and that is pretty much over all time frames , 3,5 10,15,20 years .

so it has compensated its investors not so well …one year means little if it can’t keep it up
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Re: Berkshire Hathaway

Post by Don » Fri Dec 31, 2021 1:58 pm

mathjak107 wrote:
Fri Dec 31, 2021 1:37 pm
Brbk has lagged for 20 years and that is pretty much over all time frames , 3,5 10,15,20 years .

so it has compensated its investors not so well …one year means little if it can’t keep it up
It's the only year I've owned it. :)
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Re: Berkshire Hathaway

Post by mathjak107 » Fri Dec 31, 2021 2:03 pm

Then good luck
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Re: Berkshire Hathaway

Post by Xan » Fri Dec 31, 2021 2:41 pm

mathjak107 wrote:
Fri Dec 31, 2021 1:25 pm
Xan wrote:
Fri Dec 31, 2021 10:31 am
mathjak107 wrote:
Fri Dec 31, 2021 10:20 am
The variable portfolio is the place you want to go for those higher returns .

I cant see buying a stock that has underperformed a simple index fund for 20 years .. i fail to see the logic when already using a conservative portfolio like the pp
Would it make any more sense to buy a stock that had overperformed the index fund for 20 years? Seems likely it's due to come down to earth, or at least underperform.
I would still say yes , I would take an index fund any day over berkshire..it is like betting on the long shot thinking after 20 years it is suddenly going to be this better choice
So, "yes" you would buy the overperforming stock?
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Re: Berkshire Hathaway

Post by mathjak107 » Fri Dec 31, 2021 2:54 pm

No , I don’t buy stock .. I buy broad based funds ..berkshire is like a fund unto itself and incorporates many company’s …it just has been a rather lagging fund for dedcades.

When you own Berkshire you are buying a mini fund with about 48 companies in it. That is more than the dow holds.

Which is why i much prefer the lower risk of 506 companies in the s&p , or 4159 companies in vti …and got decades better performance
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Re: Berkshire Hathaway

Post by Xan » Fri Dec 31, 2021 3:57 pm

Mathjak, please try keeping up with the conversation. Here it is:
mathjak107 wrote:
Fri Dec 31, 2021 1:25 pm
Xan wrote:
Fri Dec 31, 2021 10:31 am
mathjak107 wrote:
Fri Dec 31, 2021 10:20 am
The variable portfolio is the place you want to go for those higher returns .

I cant see buying a stock that has underperformed a simple index fund for 20 years .. i fail to see the logic when already using a conservative portfolio like the pp
Would it make any more sense to buy a stock that had overperformed the index fund for 20 years? Seems likely it's due to come down to earth, or at least underperform.
I would still say yes , I would take an index fund any day over berkshire..it is like betting on the long shot thinking after 20 years it is suddenly going to be this better choice
You say you wouldn't buy a stock that had underperformed. I'm asking whether you'd prefer a stock that had overperformed. This is all hypothetical, and the point I'm trying to make is that you're falling for something of a fallacy.
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Re: Berkshire Hathaway

Post by mathjak107 » Fri Dec 31, 2021 4:41 pm

I cant define over performed …

Stocks can go on and on and under performers can go on for decades .

AT&T , iBM , EXXON ETC ALL sucked when it came to roi…I am not smart enough to know a companies financials intimately.

Even if I got that right I still don’t know what their competitors have on their drawing boards …

Never confuse good stocks and good companies, they are not the same thing
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Re: Berkshire Hathaway

Post by ppnewbie » Sun Jan 09, 2022 10:35 pm

I try to not to worry too much about the stock price. If the underlying value of the stock continues to give me exactly what it gave me the day I purchased it (and I was happy with that number). I am OK with the stock not ever moving or even going down (I may buy more). As long as it keep earning the same (and likely more over time). Eventually it seems to corrects to incorporate the building underlying value.

Also, I feel like with BRK I am buying cash, a private equity company, the best money managers in the world, a public company, etc, etc... There is the risk of Warren and Charlie dying any day now.

I am a long term buy and hold investor in my VP.

Thanks for the input!
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Re: Berkshire Hathaway

Post by ppnewbie » Sun Jan 09, 2022 10:40 pm

mathjak107 wrote:
Fri Dec 31, 2021 2:54 pm
No , I don’t buy stock .. I buy broad based funds ..berkshire is like a fund unto itself and incorporates many company’s …it just has been a rather lagging fund for dedcades.

When you own Berkshire you are buying a mini fund with about 48 companies in it. That is more than the dow holds.

Which is why i much prefer the lower risk of 506 companies in the s&p , or 4159 companies in vti …and got decades better performance
If VTI or VOO had a P/E of 9, I would much rather buy them over BRK but they are considerably more expensive. One of my investing motto's is "It all depends on the price you pay". (I think Buffet said it first)
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Re: Berkshire Hathaway

Post by mathjak107 » Mon Jan 10, 2022 3:15 am

Good luck trying to determine what expensive means …..if I went by expensive , I would have been out of just about every investment decades ago …

It actually doesn’t matter what you pay to the extent that more money is made buying high and selling higher than any other mantra .

No mantra like buy low sell high has lost more money for investors as no one knows where low is .

Many thought low was when we lost 2000 points in 2008 ..who knew there were 4000 more to go .

Stop losses were hit , lots of panic selling , and lots of lost money was the result .

In a decline odds are next stop is lower

In a rising market the trend is your friend and odds are next stop is up .

Far more will make money buying high and selling higher …..
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Re: Berkshire Hathaway

Post by GT » Mon Jan 10, 2022 7:45 am

ppnewbie wrote:
Fri Dec 31, 2021 12:19 am
Anyone have opinions on brkb? Seems like a no brained for a long term investment at an 8 PE. Feel free to chime in if I’m missing something.
For what it is worth, Buffet likes the stock index fund for the average investor

From the Little book of Common Sense Investing

“A low-cost index fund is the most sensible equity investment for the great majority of investors. By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.”

Having said the above, invest in brkb if you want just understand the risks going in

My big concern is Buffets age - Will brkb have the same influence and respect when he passes.
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Re: Berkshire Hathaway

Post by ppnewbie » Mon Jan 10, 2022 10:13 am

mathjak107 wrote:
Mon Jan 10, 2022 3:15 am
Good luck trying to determine what expensive means …..if I went by expensive , I would have been out of just about every investment decades ago …

It actually doesn’t matter what you pay to the extent that more money is made buying high and selling higher than any other mantra .

No mantra like buy low sell high has lost more money for investors as no one knows where low is .

Many thought low was when we lost 2000 points in 2008 ..who knew there were 4000 more to go .

Stop losses were hit , lots of panic selling , and lots of lost money was the result .

In a decline odds are next stop is lower

In a rising market the trend is your friend and odds are next stop is up .

Far more will make money buying high and selling higher …..
It actually doesn’t matter what you pay to the extent that more money is made buying high and selling higher than any other mantra.
- Not sure if that is true over the long term.
- "Over the short term the market is a voting machine, but over the long term it's a weighing machine" - Benjamin Graham
- At least for me. I always lose at that game.
No mantra like buy low sell high has lost more money for investors as no one knows where low is .
- I prefer buy a great business at a reasonable price (PE, Price to Book, Return on Equity, etc...) and dont sell it.
Many thought low was when we lost 2000 points in 2008 ..who knew there were 4000 more to go .
- But again, in the VP. If the stock of a company was solid and it was cheap. Buying the stock for the long term would still be a good idea.
Stop losses were hit , lots of panic selling , and lots of lost money was the result .
In a decline odds are next stop is lower
- I put that in the category of trading not investing. "Be greedy when others are fearful."
In a rising market the trend is your friend and odds are next stop is up .
Far more will make money buying high and selling higher …..
- Be fearful when others are greedy.

I think you have some valid points during a drawdown phase, which I believe you are in. In an accumulation phase, to me this is a relatively easy path. I have equities in my portfolio that have a PE of 3 based on the price I paid for them. To me they are like companies I own that are money machines, as long as the management teams stay solid.
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Re: Berkshire Hathaway

Post by mathjak107 » Mon Jan 10, 2022 10:52 am

In my accumulation it was 100% equity funds for decades
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Re: Berkshire Hathaway

Post by Don » Fri Mar 25, 2022 3:27 pm

It's been doing well. Extremely tax efficient in a non-retirement account.
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Re: Berkshire Hathaway

Post by ppnewbie » Fri Mar 25, 2022 4:13 pm

Don wrote:
Fri Mar 25, 2022 3:27 pm
It's been doing well. Extremely tax efficient in a non-retirement account.
I was actually looking hard at Alleghany a few months ago. It was acquired by Berkshire recently.
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