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Berkshire Hathaway and my Portfolio January 17, 2014

Posted by shaferfinancial in Finance.
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As some of you noted, Berkshire Hathaway represents 61% of my portfolio. This is actually a little lower than it has been over the last 5 years. I think over time it will continue to go down as a percentage of my portfolio. But this doesn’t mean I am any less enthusiastic about owning it. Only that as I age, I need to start to think about income, more appropriately dividend income. I have increased my dividend income by 4 times over the last few years. I feel I need to increase it another 10 times between now and when I retire. So far I am on schedule.

Back to Berkshire Hathaway: It’s price has stagnated for about 6 months with the 20% price appreciation happening in the first 6 months of 2013. Despite this it continues to increase its book value every quarter and increase its cash flow each quarter. I have noted over the last year that it is performing well. There are no black clouds on the horizon for that I can see, sans Buffett’s retirement or death.

The price to book has been declining over the last 6 months and is now probably not much higher than the 1.2 ratio that Buffett has said he would buy back shares. Because of that it is unlikely to move much lower.

I recently talked to a new friend that owns an “A.” He says he will probably sell it when it goes above $175,000 because he fears what will happen when Buffett is no longer CEO. He is in his 60s and that is not a bad idea, but I suggested he might want to wait to $180,000- $185,000. I think it is likely to get there next year.

Another note: I have twice thought about selling my Bs to get a couple of As. I am glad I haven’t gone that way because I now have the ability to sell small parts of my Berkshire Hathaway account as I see fit, without having to make the big decision of whether to get out entirely.

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