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I’ve never sold a single share of BRK which I’ve acquired over the years since 1998. I’ve been happy staying the course and am a bit surprised by my own self-discipline that I didn’t get shaken out earlier. However, for the first time, I’m feeling a bit of trepidation and am getting itchy fingers on the keyboard playing with limit orders. It’s been one helluva ride but I’m basically thumb sucking right now trying to reach conviction that maybe now is a good time to pull the trigger and dump a bunch in my Roth & 401k. I won’t touch the shares in my taxable account which are earmarked to charity when I pass. I have slept well in the past but am now beginning to question my own LTBH philosophy, given the over concentration I now have in BRK (84% of net worth). It’s the idea, that as I approach age 70, I’ve already won the game, so why keep playing? It’s also the sudden realization that I want to keep what I got in case of a Black Swan event. If I liquidate all BRK in my tax-deferred accounts, that will bring me down from 84% or so, to about 62% net worth in BRK in the taxable account. I can surely stomach my allocation of BRK at that level, even though it may still be a lot of concentration for many of you on this board. Any thoughts? Anyone facing a similar dilemma? I’m tempted to ride the momentum for a few more trading sessions until the price begins to stagnate. I know Jim has a few rules of thumb about letting the chips run for a bit after breaking a new high?

On another subject, I have cash sitting mostly in treasury funds, but am considering venturing out in duration with short term bonds 1-5 years. Can anyone offer some thoughts on where to park fixed income stuff for now. Short term, intermediate, long term bonds? I fear a resurgence of inflation could be just around the corner once the Fed starts cutting, so getting whipsawed in the bond market might not be fun just to eke out a bit more total return/capital appreciation using bonds or bond funds with longer maturities. Without putting too much stock in bearish macro considerations, but rolling recessions for the next few years may not be all that far fetched, given the distinct possibility of manic fed tightening and easing that could wreak havoc on battling the twin challenges of inflation and massive debt expansion. Thoughts?

84% in Berkshire is quite high at age 70. But many of us here are there as well given long holding periods.

Do what make you sleep well at night. No tax consequences obviously with selling all of part of your IRA holdings.

I am 46 and I also have 100% invested in Brk in my retirement account (401k roll over), and 75% in none retirement.

First, you shall never sell when a stock hit 52 weeks high.

Second, the way I deal with this issue is to allocate some money to buy stocks other than Brk. And ONLY when I can prove to myself that I am making more money from my other stock picks than Brk, I will sell more Brk. So far, it has not easy at all to beat BRK — mainly due to that I am not as smart as I thought I am. For example, this year 90% of my stock picks made money , but one stock (Spirit) lost me a lot of money, making my gain YTD negative. Fortunately, I gained almost all the money back because I didn’t sell any Brk (I even used margin to buy other stocks to avoid selling Brk)

When it comes to concentration in one security it is a personal decision obviously.

My view, and I'm 48% Berkshire, with a little less than half this amount in taxable accounts, is that for me, I am dollar cost averaging out, I sell once a year.

If I were to drop dead today, my wife would not be able to handle having so much in one stock, this is one of the reasons why I am systematically reducing it.

I am trying to think of myself the way Warren does when it comes to gifting, he gifts shares 1 or 2x a year around the same time, it doesn't matter where the stock is trading.

jet,

Thanks for sharing your thoughts. My 2 cents- I am 58yo, retired for 2y and 2/3 of our assets are in BRK, the majority in taxable accounts. I do think at times about trimming when it hits a pretty high P/B, but I truly detest paying LTCG. We have 18 months expenses in cash/MM (FZDXX). We own a few other equities and I’d rather trim when necessary (like AAPL) than depart with the “sacred” BRK shares, which we’ve kept accumulating since 2011.

I cannot even touch my Roth IRA for another 2 years without penalty, and since those withdraws will be tax-free, I’d rather just leave the Roth untouched for a while & let it compound. Like WEB & many other shrewds here, I’d like for BRK to keep compounding & ultimately give a good bit more to charities down the road than to start distributions now.

So I am just sitting tight for now but I totally feel your “predicament.” I realize if I were 10-15 years older, of course, my perspectives and actions would differ. Please keep us posted how you end up navigating this airspace ;)

I am of similar age and BRK concentration as the jetjockey. I have sold some this year for living expenses, but wonder if I shouldn't lighten up more. I was thinking with the market this high I might just move a good chunk into cash. Then I realized "oh wait, Warren is doing that for me". Cash is now listed as 28% of the market cap.

I was thinking with the market this high I might just move a good chunk into cash. Then I realized "oh wait, Warren is doing that for me". Cash is now listed as 28% of the market cap.

Good point, and it’s probably even higher now than it was June 30.

The other point it may be worth considering is that 84% in Berkshire is not necessarily too concentrated if it’s already way more than you will ever need, with a large portion earmarked for charity. You obviously want to maximize the expected value you give to charity, and investing in Berkshire makes sense with that objective, but if most of it is for a charity that doesn't depend on that money, you can tolerate a small risk of substantial loss much better than someone for whom a big loss would be personally devsstating.

As for whether to sell, I'm reminded of something my mom once said to me: you don't retire FROM something, you retire TO something else.
In the same way, it's not about the selling of some Berkshire, it's about what you want to do with that money, and when. Focus on the destination of that wealth, not its current location.

It sounds like you don't really have to squeeze your portfolio hard to eke out every last percentage point of returns, so sitting tight is always entirely acceptable. That's not my personality, I hate doing nothing (often to my detriment), but it has worked for you and for very good reasons. Depending on your situation, the reasonably generous current valuation multiples aren't, by themselves, a huge reason to sell.

Conversely, if you have something you want to DO with those funds, in a certain time period now or in future, then you want to do what's best to meet that goal at that time frame. If the time period is fairly soon, then yes, selling at today's "pretty darned good" valuation multiple makes a lot of sense.

If you're into a bit of arithmetic, have a look at these two posts.
https://www.shrewdm.com/MB?pid=496127094
https://www.shrewdm.com/MB?pid=679992747
Executive summary version: if valuations were typical of the last 15 years, a reasonable starting notion, the price would be around $368-383 these days, rising at the usual inflation + roughly 7%/year. Think of that as your target curve for the future price of Berkshire. And you can probably estimate the real after-inflation return from cash for a while: around 2.5% now, probably drifting down towards zero or perhaps a bit less. Given those two probable wealth trajectories, just figure out if your return from now until your target "use this wealth" date is higher with selling Berkshire today and holding cash, or continuing to hold Berkshire. For time frames within a couple of years, perhaps selling is the statistically better choice? And of course, if Berkshire dips, you can always buy back in.

As for the bonds question, short term paper seems the smart move at the moment. Positive real yields for once, and no risk of losses if you want to liquidate at any point because some better choice comes along. Rates are falling gently, but not nearly enough to tempt me into long term paper. Others may (will) have wildly differing opinions. I have T-bills maturing most months in the next year.

Jim

“ On another subject, I have cash sitting mostly in treasury funds, but am considering venturing out in duration with short term bonds 1-5 years. Can anyone offer some thoughts on where to park fixed income stuff for now. Short term, intermediate, long term bonds?”

Invesco BulletShares ETF. They have end dates and behave similarly to a bond. The investment grade funds have a .1% management fee and the high yield (junk) bond funds have a .42% fee.
https://www.invesco.com/us/en/solutions/invesco-et...

I have a tiny amount in their BSCP 2025 fund. Otherwise, I have money in various treasuries and treasury ETF funds.

If you are concerned about inflation and do not need to squeeze every last basis point of return from the non-equity portion of your portfolio, consider some TIPs. I recently bought the 4/15/29 with a 3.875% coupon and a YTM of 1.85%. (Higher coupons are generally considered less desirable because of the reinvestment risk but this was the highest YTM at the maturity that I wanted.) That would be 1.85% plus inflation. Most of the time the YTM on TIPs is near or even below 0%. Mr. Market has decided that inflation is dead so nobody wants the inflation protection provided by TIPs.

This was the 5th rung in a ladder of TIPs intended to meet my living expenses over the next 5 years. The first 4 years were purchased last October with an average weighted YTM of 2.65%.

You'll want to do this in a tax deferred account. Otherwise you will wind up paying tax on the inflation adjustments without getting the cash.

I cannot even touch my Roth IRA for another 2 years without penalty

That's not quite correct. You can withdraw the full dollar-amount of your Roth IRA contributions penalty-free. For example, if you started your Roth 10 years ago, contributing $5k per year, you could penalty-free withdraw $50k.

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