To Berkshire or not to Berkshire
So I often keep an eye on the stock symbol for Berkshire’s A shares. It just entertains me to think of being able to afford a share of that stock, which is in the 90 thousands at the time of this writing. And of course, I can’t do that at this point in my life.
But!
The tax liens I held were recently redeemed. The house that they were on was foreclosed on, and the new buyer (a bank, I believe) of course had to pay off the liens. This means that I can now afford one of Berkshire’s B shares, which is around $3000.
Pros: I really want one. They have an excellent track record, to say the least. It’s a down year, so maybe I would be getting a bargain.
Cons: $3000ish is a lot! It’s waaayyy over what I invest per company. Way way way over. The biggest exceptions I’ve made to my rule on how much to invest in each company have been Freddie Mac, which did horrifically, and one share of Google, which has hovered right around what I paid. Not exactly stellar recommendations for making a huge exception.
Of course, Berkshire is in a lot better shape than Freddie Mac!
But also, if I don’t buy a B share, I could continue with my original goals much easier. I could buy another tax lien, and add some more money to my IRA. Or, I could buy a Berkshire B within my IRA. That’s certainly a possibility.
A third possibility is to buy only a tiny fraction of a B share, using my mostly-neglected Sharebuilder account, and then continue on with my other goals as planned.
Decisions, decisions. Guess I will have to sleep on it.
April 5th, 2009 at 1:44 pm
The biggest issue with Berk is the risk that either Charlie Munger or Warren Buffett will pass away. Even though Warren is potentially making really good moves for the longer term for Berkshire the stock will take a big beating.
Look at apple on the rumor that Steve Jobs had a heart attack. I think Berkshire would get hit even harder and to the point where it might take a long time to recover.
April 5th, 2009 at 1:56 pm
mfd, yeah, I agree with you there. I think that he does have enough in place that Berkshire would continue to be a good company, but short-term I imagine people would panic.
April 6th, 2009 at 3:58 am
As a proud B share owner myself, I’ll agree to what’s been said. When Buffett dies, people will freak out. But he’s an obsessive man, and he’s left a clear path for the company if the event he passes away.
I will say this: owning Berkshire is like being a Bulls fan when Jordan was playing and winning all those championships: there’s absolutely nothing like it. It doesn’t feel like you’re investing, it feels like you’re participating in something much bigger than yourself.