Berkshire Hathaway- A GOOD Investment For YOU?

Posted on July 6, 2008. Filed under: -- Building Wealth, -- For The Investor In YOU, -- Investing | Tags: , , , , |


By Molly Greaves

You’re lucky enough to own some Buffet investments. But are they are the best investment?  

Buffet

All of us know Warren Buffet. And if you dont, I will blog soon about all of the reasons the rest of the world knows him. Stay tuned for that.  If you’re like me, you highly respect the guy, and some of you may also think he’s a funny, nice guy that has quite the knack for investing,  like I think.   Buffet is loved by so many people for making them MEGA RICH. Not everyone, however, is ready to jump into Berkshire Hathaway these days.

SmartMoney’s June 2008 edition quotes 10 people from the finance sector who share their experience to advise on the question: “Would you Invest in Berkshire?”  A lot people think Berkshire is a must buy if you can afford it, but here are 5 quotes from 5 experts that arent so sure about that. 

-“Berkshire’s out performance versus the market has narrowed over the past decade and will continue to narrow. Finding good investments will be harder than ever. There’s fiercer competition,” says Doug Kass from Seabreeze Partners.

-“The salad these days for insurance–the backbone of the Berkshire complex–are over. Profit margins will be under pressure in the face of a more competitive landscape.  Buffet expects insurance-industry profit margins to shrink by 4 percentage points in 2008–even without a catastrophe.”

-“Berkshire’s premium valuation and it’s perception as a safe harbor are by-products of the credit crisis and market turmoil. Should the stock market conditions improve, Berkshire’s shares may  under per as other financial shares regain their footing.”

-“Investors will dump shares if Buffet, 77, is no longer at the helm. They may even sell if he starts to delegate more tasks and responsibilities than he already has.”

-“A sum-of-the-parts analysis indicates that Berkshire shares are fair-to-overpriced relative to the market. Melding price-to-book ratios on insurance and its other businesses on produces a fair value of $125,000. Buffet himself said investors should be able to find better opportunities than Berkshire stock.”

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2 Responses to “Berkshire Hathaway- A GOOD Investment For YOU?”

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Great blog Molly just found it today

I have a dream. Everyone who puts out financial advise would have her/his history of such advise prominently displayed. It would be interesting to put up the long term returns of the advice those who advise against Berkshire have gotten since we know what Buffett’s long term rate of return is! Say Perry XXX (8% rate of return) advises against Warren Buffett’s (21% rate of return) Berkshire Hathaway! Would be an illuminating addition, no?

And yes, I am very long on Berkshire Hathaway and a happy 10 year investor with Buffett. Only wish I sold all my mutual funds earlier and put it all into BRK’s!


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