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What's wrong with BRKB?
Old 12-22-2010, 02:23 PM   #1
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What's wrong with BRKB?

This stock has missed the run in the second half of the year. Should I sell it? I'm still in the hole 10% on the shares that I have.
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Old 12-22-2010, 02:28 PM   #2
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All I know is that Berkshire's Chairman and CEO didn't get to become an ubergazillionaire by selling low.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 12-22-2010, 02:34 PM   #3
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You should always tax-loss harvest before year-end. It helps avoid the loss aversion trap. So yes, you should sell it.
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Old 12-22-2010, 02:35 PM   #4
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You should always tax-loss harvest before year-end. It helps avoid the loss aversion trap. So yes, you should sell it.
What if it's in an IRA?
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 12-22-2010, 02:37 PM   #5
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Not my problem then. I don't buy stocks that are going to go down in my IRA.
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Old 12-22-2010, 03:32 PM   #6
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I don't follow the stock, but is it time to buy more? It might be a silly thought, just asking.
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Old 12-22-2010, 03:35 PM   #7
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I don't follow the stock, but is it time to buy more? It might be a silly thought, just asking.
Well, if you're an individual stockpicker, it would mean you perform due diligence on the stock and the company to see whether the decline may be due to eroding fundamentals or whether it's just as good as ever and is just out of favor. That could well convince one to sell, to buy more, or to stand pat depending on what they found.

[Disclaimer: BRK is the only single-company stock I own, the rest of my holdings are in ETFs and mutual funds. I discovered I'm not very good at the type of due diligence I refer to above.]
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 12-23-2010, 11:45 AM   #8
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This stock has missed the run in the second half of the year. Should I sell it? I'm still in the hole 10% on the shares that I have.
Let me know how much do you want for it...

If six months' performance is your stock-picking criteria then you need to sell Berkshire Hathaway. You won't make any money but you'll sleep a lot better at night.

If you're looking for reasons to change your mind, then about 10 months ago Buffett gave an interview where he actually indicated with a wave of his hands that he felt the stock's price was in the lower end of the range of its intrinsic value. Buffett almost never gives any personal assessment of the stock's relative value, and this "signal" was hopped on by the financial media like a pack of starving wolverines. Since then Berkshire's businesses have seen improving numbers and they've been hiring more employees.

One perceived drag on the stock is Buffett's "derivatives" (put options) on various equity indexes. He's required to mark these to market at every quarterly report so their value swings by hundreds of millions of dollars, which can tend to obscure the hard-cash results of Berkshire's businesses. When the annual report is released in February you may see quite an uptick in both the businesses and the derivative contracts, which would easily move the stock price by at least 10%.

But that's just my guess as a nearly-10-year shareholder.

Moderators, should this thread go in the stock-picking forum?
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Old 12-23-2010, 11:54 AM   #9
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Moderators, should this thread go in the stock-picking forum?
Sounds like a good idea since it will fit in better there. Done.
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Old 01-03-2011, 09:57 AM   #10
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Sell covered calls above your buy price every few months.
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Old 01-09-2011, 06:21 PM   #11
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Whitney Tilson could be accused of talking up his book, but the guy is one of the most credible Berskhire analysts next to Alice Schroeder.

He claims that it's trading at a 25% to intrinsic value:
Whitney Tilson Analysis of Berkshire Hathaway -- GuruFocus.com

I think the traders (and especially the options traders) have been paying too much attention to the mark-to-market losses of the derivatives. In the meantime the corporations have been sharply raising their profits and even the stocks have had some nice gains. Now people are starting to take notice of these numbers in anticipation of the Feb annual report.

I can't predict 2011 but I suspect I'm going to be rebalancing at least once...

Speaking of Alice Schroeder, does anyone know what's going on with her? Her blog went dark a couple months ago and someone put up a Facebook post about her father. Other than that FB post, you can't tell that the woman is writing even so much as a "I'm on hiatus until..." placeholder.
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Old 01-10-2011, 06:23 PM   #12
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Don't sell. Haaaaaang on Sloopy, hang on.
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Old 01-10-2011, 06:24 PM   #13
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The problem with BRK is that Buffet is getting old. One day, sadly, there will be no Buffet at the controls. BRK will sink 30%.

This is why I like MSFT. It has the reverse problem.
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Old 01-10-2011, 08:08 PM   #14
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I definitely would not sell at the current price. Like Nords said, the different businesses are just starting to rev up, and the stock price is way below trend on P/B basis. Plus the next earnings report could be a big one.

Tilson thinks it could be 43% higher in 12 months.
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Old 01-10-2011, 08:44 PM   #15
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The problem with BRK is that Buffet is getting old. One day, sadly, there will be no Buffet at the controls. BRK will sink 30%.
This is why I like MSFT. It has the reverse problem.
How ironic that Bill Gates has left Microsoft and sits on Berkshire Hathaway's board.

I suspect that the Buffett effect has already been sidelined as he locks up the float in various large high-capex businesses. Stockpicking is a minor part of the company. His successors will have little more to do than to try to keep up with Ajit Jain and to decide whether to pay a dividend.

If Berkshire drops 30% when Buffett departs then I'll probably be buying to bring my AA back up into the band. And if the stock stagnates then I'll be selling more covered calls to collect my own personal "dividend".
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