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- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 3
Jim, and others, if somone is retired, and has no postion in BRK-B,and wants a 50% position of portfolio in it, how would you accumulate it now, dollar cost average, or other?
Thanks in advance
No. of Recommendations: 1
Dollar cost average is a good idea as right now BRK is rather expensive. So not a good point in time to go in big. Supported by Jim's last post where he is indicating to sell covered calls, which you only do if you think there's no big upside for the next (short) time.
(I am the amateur of those ones posting here. If Jim replies you'll get a much more competent opinion.)
No. of Recommendations: 1
taxable account or American with an IRA ? GL.
No. of Recommendations: 2
Don't do it.
Didn't you have some BRK once and sold out because of volatility?
No. of Recommendations: 9
knowing what I know now, if I had zero berkshire, I would forget it and just buy an index fund. The only way I would invest in berkshire now, with new cash is if I were buying at a decent discount to a recent repurchase price where warren bought in volume, so if he bought $3B in a month and paid 325, then I would wait till around that price.
No. of Recommendations: 5
Buffett bought in volume at average price of 357 in September.
Brk is neither very cheap nor very expensive now.
Cheers,
Brian
No. of Recommendations: 0
taxable account or American with an IRA ? GL.
Both
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Yes had and sold in past
No. of Recommendations: 2
I dunno....while BRK isn't cheap, it still seems cheaper than the market as a whole. Of the three things I own (BRK, VTI, and VXUS), I'd be most hesitant to buy VTI....in fact just donated some.
No. of Recommendations: 6
Jim, and others, if somone is retired, and has no postion in BRK-B,and wants a 50% position of portfolio in it, how would you accumulate it now, dollar cost average, or other?
A lot would depend on where the capital is originating. If it was in SPY then I would have very little concern in moving that capital in large chunks to BRK. If it was in CASH I would probably take a more conservative approach and use caution. It is almost certain that BRK will be cheaper on a valuation multiple in the future, but in absolute dollar value maybe less certain (but very likely). Waiting for 1.4x book to start a position would seem like the option with the best possible / most likely outcome.
tecmo
...
No. of Recommendations: 3
I tend to concur with Web436, that Berkshire is neither Cheap nor expensive right now. Short term (1-year) maybe it's unlikely to move much higher - based on Jim's analysis of how it has traded since 2008.
But I think some introspection is due because you're looking to get in (back in!) at the highest Berkshire prices ever. Why now, and why did you sell out before? Also what are you invested in now? The answer to those questions can help to formulate a proper plan.
Is there a danger you'll jump back to your old investment when it moves up in price and Berkshire moves down in price? And is your current investment a reasonable earnings-generating investment? If so, maybe stay put.
There are investments I consider more of a collector item, like beanie babies, baseball cards, or bored ape tokens. Out of those I'd move everything out at once.
No. of Recommendations: 11
Buffett bought in volume at average price of 357 in September.
Plus 22 cents!
Worth noting that that's the average price paid specifically for B shares.
They were willing to pay 2.8% more for A shares on an equal economic interest basis.
Brk is neither very cheap nor very expensive now.
It is somewhat more expensive than usual. Based on historical average ratio of price to peak book, and making a guess of end-2023 book, it's around 8.2% more expensive than the average since 2008, for example. Using last known book from Q3, 12.6% more than average since then.
But sure, it's not wildly expensive in an absolute sense.
By one possible definition, "fair value" is the purchase price for any equity that would get you a return of Siegel's constant: about inflation +6.5%/year. If Berkshire had been fairly valued on average since 2008, the average one year return would have been about that number, rather than the actual number which has been inflation+8.8%/year. So by that reasoning, and observing that it hasn't been getting more expensive in any meaningful way, the average observed valuation level has been quite a bit cheaper than actual fair value.
Jim
No. of Recommendations: 22
Dollar cost average is a good idea as right now BRK is rather expensive. So not a good point in time to go in big.
That makes some sense.
My suggestion: If you have decided that you are going to do dollar cost averaging, perhaps start out with quite small gradual dribs for now.
Pick up the pace if/when it's cheaper.
The reasoning: there is usually a point during most years that the stock is a much better deal than it is today, so you can buy a whole bunch the next time there is some panic in the market. If it's a really good deal (under 1.3 times book?), forget the DCA and just buy all you want at that time.
Fun with numbers (not to be taken too seriously): if the future resembles the last 16 years, there's a 92% chance that Berkshire will close at a ratio of price to peak-to-date book-per-share of 1.31 or lower in the next year. Emphasis on the "if"!
Jim
