Many people are saying now is a good time to buy shares in Warren Buffett’s Berkshire Hathaway (BRK.A). They are down about half from their peak and are trading below book value. Get in now, say fans. Look what happened when Berkshire took a beating during the dot-com era: afterward, the shares tripled.
“You can buy the stock for its liquidation value, paying zero premium for the great management and fairly dependable earnings stream …. This may not happen again for decades,” said one.
But as one doubter said in the comments section: “If you buy Berkshire’s stock, what happens to your investment on the day Buffett drops dead?” The Oracle is nearly 80 years old and won’t be around forever. His absence from Berkshire could leave a rather serious gap.
There surely must be a premium in the shares simply because of Buffett’s reputation. That could come out of the price. Moreover, Berkshire appears to be an extension of Buffett: It’s been his show. I’m not sure if his replacement will have quite the same magic. There could well be a rally along with the market, but the long run might be a different matter.Related Links
Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter
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