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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Invest like Buffett? Date: 8/31/2011 10:21 AM
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http://finance.yahoo.com/news/Why-You-Cant-Invest-Like-usnew...

No, you cannot do it, and for obvious reasons: you do not have enough money.

You, too, could have invested in Goldman Sachs in 2008. But here's the difference between you and Buffett. If you had an extra $12,000, you could have purchased 100 shares of Goldman common stock at $120 a share. Considering that Goldman had been worth over $200 a share the year before, you might have thought you were getting a pretty good discount. You also would be receiving the Goldman dividend of $1.40 a share, a rate of just over 1 percent.

But Buffett had more than $12,000 to invest. He had $5 billion. So he negotiated a much better deal. He bought preferred stock that came with a special dividend. Instead of 1 percent, he negotiated a 10 percent dividend. So now every year he receives a check for $500 million. Then, only after he gets paid, do common stockholders get their paltry 1 percent.


So suppose you invested in Goldman stock when he did.

Goldman is selling at roughly $110 a share, slightly below its 2008 price. If you had invested with Buffett, you would have lost about $1,000. Buffett's lost some capital too, but he's collected $500 million a year in his special dividend.

There are also the examples of GE and BAC in the article.

Personally, I think that the reason that GE and Goldman have not done well since Buffett invested in them may be the very high interest rates that he was able to get. Will the same thing happen to BAC? I certainly would not buy that stock now.
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Author: StockGoddess Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69485 of 75381
Subject: Re: Invest like Buffett? Date: 8/31/2011 11:03 PM
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Just buy berkshire...

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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69491 of 75381
Subject: Re: Invest like Buffett? Date: 9/1/2011 9:46 AM
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Oh Yes! Buying Berkshire Hathaway is a great deal.

Over the last year it is down 7.5%, whereas SPY is up a little better than 18%. And if you look at a 3 year chart, BRK.A is down 5.86% whereas SPY is now a little better than even at up 1.31%.

Such is the legend.

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69492 of 75381
Subject: Re: Invest like Buffett? Date: 9/1/2011 10:13 AM
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Like life, it depends where you pick your beginning point:

three months: BRK-b Beats SPY by about 1.5%
http://caps.fool.com/Ticker/BRK-B/Chart.aspx?source=icasitta...

five years: BRK-b by roughly 15%
http://caps.fool.com/Ticker/BRK-B/Chart.aspx?source=icasitta...

ten years: BRk-b by roughly 50%
http://caps.fool.com/Ticker/BRK-B/Chart.aspx?source=icasitta...

I think those include dividends (which BRK has none), and looking at the site, you have to put in the time periods yourself.

Indeed, SUCH IS LEGEND!

Hockeypop

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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69493 of 75381
Subject: Re: Invest like Buffett? Date: 9/1/2011 10:46 AM
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Sure it depends on your starting point. From which you might conclude that it needs to be traded like any other stock, and not just bought and held on faith.

Fact is, after the peak on 9/18/2008, it has lost 14.25%, whereas SPY has gained 2.86%. For the last 3 months, it has very closely tracked SPY, and has currently lost a little bit less than SPY. Is it a buy now? Probably, since the chart looks moderately good.

Just holding it forever, however, is a bit dicey, unless you do not mind the entirely avoidable loss of 14.25% of your position.

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69496 of 75381
Subject: Re: Invest like Buffett? Date: 9/1/2011 2:11 PM
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Well, I'll go back lurking here in a minute, but three points.

1) Price at the entry point DOES matter. No argument there. But there are ways to mitigate that situation such as dollar cost averaging or better, value averaging IF you're looking at an allocation to any stock. People talk about the "lost decade" from 2000 to 2010, BUT if you'd DCA'd into that period you'd have found that there were more down months than up months, so your price basis would have have been lower overall than one hit on the highest day in 2000.

2) To Berkshire's point (and Mungofitch at their forum is great), the intrinsic value has continued to increase all during that period. All stocks will go from "hot" to "cold" and back again, and it's very difficult to guage when market sentiment will turn. BUT, when basic intrinsic value rises at annualized rates from 8-12% or more, that makes the choice a good one UNLESS you're betting on the short term (and depending on the term you may move from an investor to a trader).I admit that I'm in the camp that Berkshire is a screaming value now, but that is NO guarantee that it will only rise from here.

3) The buy and hold discussion is a longer one that includes temperment, discipline, time, cost and real return. Buy and hold IS, IMO, the guage against any other decision should be measured.

Hockeypop

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