No. of Recommendations: 21
Great discussion here and am enjoying this thread. Excellent points raised by longtimebrk, Said, Tecmo, DTB, and of course, Jim. I think there is a 5th option that can be added to Said’s considerations. Sell some, especially in tax-deferred accounts, simply because there may be a need for some of us to diversify away from a single stock holding and adjust an asset allocation mix that is getting overly concentrated in BRK. This may be as good a time as any to do so. That’s me in a nutshell!
I’ve held BRK through thick and thin, over 25 years ago with my first lots in 1998. I have never sold a single share, and never gave it a thought that I might eventually do so. If I loaded all 76 lots correctly into the formula on google sheets, I’ve enjoyed a little under 12% IRR, using a strict buy and hold, buy and add process. I have used no leverage and no market timing aside from backing up the truck, along the way, on fairly significant downdrafts. As I got older, wiser and more disciplined, I became more patient. I wanted purchases at 1-1.15 or so BV, and committed a boatload of cash during those brief periods, more so in the latter half of these last 25 years. In recent times, just checking my Roth IRA as one data point, Berkshire shares acquired in 2018 are up 15% or so, last I checked.
After perusing the annual report, I’m probably more sanguine than most who are understandably concerned about recent developments in the rails and energy, as well as the challenge of moving the needle with BRK’s size, coupled with successorship uncertainty. I have not given up on my steadfast position to stay anchored in BRK for much of my net worth in my remaining years. BUT, for the first time ever, I am seriously considering selling all BRK in both my 401k and ROTH IRA, with no current tax consequences. The reason has more to do with my heavy concentration. I’m all in with 82% of net worth in BRK, (aside from a small position in DLTR, up 75% in 2.5 years roughly, THX JIM!). If I were to do that, I could reduce exposure to about 60% or so of net worth by holding BRK only in my brokerage taxable account. I will probably just put the proceeds in cash and wait for a better day, most likely indexing at some point, since I am more loathed than ever to pick stocks as I once did when I was a younger man.
One thing I will not do however is to sell those taxable shares. The substantial embedded cap gains would kill me in taxes (I’m talking an 8 figure account). Average cost basis in there I see is around $67/share. I already have two pensions, and will begin heavy RMD’s in 3 years, another unwanted outcome, along with some final ROTH conversions with even more taxes. To make a check to the IRS for that much money, on an interest free loan, only to deploy the proceeds in cash, and then ultimately in some other equity index one day, which will only generate even more income taxes, with dividends, is just too unpalatable for me to stomach — doesn’t make any sense! Fidelity advisor has hinted at his great services in managing that pot of gold, and I jokingly told him that charity will be best to receive that cash on my demise, instead of handing it over to a costly wealth manager, and you will have to pry those shares out of my dead hands when I’m six feet under. 😂
So, for the first time in my life, I think I will deviate from my discipline and diworsify away from my position in BRK. I can hear Charlie on my shoulder telling me, just as he did in answer to the question about leaving to the heirs, paraphrasing, “Tell them not to sell the damn shares!” Unfortunately, I’m not as nimble footed as Jim, and I missed that opportunity in the pre-market trade, so here I am procrastinating and vacillating once again. I’m approaching 70 this November, and although I sleep ever so soundly with my significant concentration in BRK, I think I will sleep a tad bit better by adjusting my asset allocation at this point in my life. Who knows what I’ll do? I’ll report back if and when I do pull the trigger.
