Good Morning,
Here is an idea for discussion.
How’s about, since we hear constantly about Mr. Buffett does it this way, 12 steps to follow BRK, The Oracle of Omaha is buying this or selling that…
Let’s just buy BRK-b.
Or, how about this idea; Let’s put all of the cash portion of the portfolio in BRK-b. Then when we go to buy a company, it gives a whole new perspective. Is this prospective investment better that I own now?
Just sayin…
Jim
Won’t work. BRK-B has a price to tangible book of 1.87. So, if you buy BRK-B, you are paying an 87% premium to what you would pay if you replicated the portfolio yourself. This isn’t quite right since some of the companies are entirely owned by BRK-B and don’t trade. See’s Candies is the famous example.
You could replicate much of Buffet’s portfolio (with a delay—he only reports quarterly). There is an academic study showing that, if you had done this, you would have beat the market pretty handily. But Buffet’s skill is already priced into BRK-B. Watch that P/B gradually slide down after he retires.
If I understand you correctly, if I have x number dollars waiting to invest sitting in a .1% savings account, instead, I buy shares of bro-b. Even though I may not like it as a fast grower, I’m pretty confident it’ll match or beat the s&p 500. Going forward, if I find an investment I’m interested in, I compare it vs brk-b to decide whether or not to pull the trigger.
Or, just put the cash in one’s preferred ETF or index mutual fund with low expense ratio and be sure of matching the market pretty closely (where “market” is defined by the index chosen).
Phoenix,
If you are simply wanting to beat the S and P 500 index here is another suggestion.
Buy WAB instead. BRK is steady and will double every five years but WAB will more than triple in value based on the past 10 year’s record.
Jim
Over the last 2 years BRK-B has underperformed SPY. Over the last 5 years it is close to a wash. So if recent history is a guide your " It’ll match or beat the s&p 500. " is a guess , and an optimistic one at that.
The whole point of cash (for me) is to protect me from generalized stock market declines and to give me cash to buy equities at bear market bargain prices. BRK -B fulfills neither of these goals. In any case Buffett is an elderly man with a huge amount of asserts to move,both of which make beating the market by a lot rather unlikely.BRK is big snd diverse enough to almost be the market or something close to it.
Any premium BRK has over it’s assets will likely not outlast Mr Buffett by much.
If I understand you correctly, if I have x number dollars waiting to invest sitting in a .1% savings account, instead, I buy shares of bro-b. Even though I may not like it as a fast grower, I’m pretty confident it’ll match or beat the s&p 500. Going forward, if I find an investment I’m interested in, I compare it vs brk-b to decide whether or not to pull the trigger.
Yes, that’s the idea
i remember reading that saul uses WAB as a placeholder for dry powder between investments and yes i was just trying to beat the S&P, now i’m aiming much higher.