For example, if Buffett was hit by a truck tomorrow, I would expect the price to fall significantly.
He-man was suggesting that Berkshire was like a mutual fund. My point was that other factors can affect the price of Berkshire shares. When Buffett dies, the share price may fall. That may not be justified, but it underlines the difference between Berkshire and mutual funds.
Is it fair to say that Berkshire Hathaway stock is a tax efficient way to get diversification? Lacking dividends presumably it reduces the effect of taxes significantly long term?
Is it fair to say that Berkshire Hathaway stock is a tax efficient way to get diversification? Lacking dividends presumably it reduces the effect of taxes significantly long term?
----Although diverse it is entirely based on the US market.
----Currency conversion costs and currency risk. If the euro strengthens during the period you are invested in this company it will dampen your profits.
----dividends I guess are reinvested therefore benefiting from the compounding effect.
Hi landlord
A good summary.
This is an argument against having all your money invested in BH. It is not an argument against having it as part of a diversified portfolio.
I don't think that is an advantage or disadvantage. I have shares which pay dividends. I reinvest those dividends as I see fit.
One other attraction of Berkshire Hathaway and all companies which don't pay dividends, is that they can be useful if you have CGT losses forward on other shares. All other things being equal, a profitable company which does not pay dividends, should have a higher capital gain.
So in summary.....
The Cons
----Although diverse it is entirely based on the US market.
----The unpredictable medium to long term ramifications of Buffett's passing?????
----Currency conversion costs and currency risk. If the euro strengthens during the period you are invested in this company it will dampen your profits.
----It is unlikely we will ever see the phenomenal growth rate of past years however we now benefit from the underlying stocks being larger and more stable.
Not the case, it's holdings provide it with a good exposure to global markets.
I can think of at least three Berkshire money managers capable of taking over and indeed at least one of them has been out performing Buffet for some time now.
Given the company's exposure FX changes it is not as simple as that.
Since 2010 the price has almost doubled! It is either very overpriced or there is more growth than you think.
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