UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev | Next
Author: lngtrmcptlgns Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 9217  
Subject: Re: please critique my simple-minded... Date: 1/22/2011 2:41 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
The questions were posed more in terms of a DCA perspective.
Let's use BRK-B as an example. Currently trading around $80/sh. A single transaction would be
60 shares @ $80/sh = $4800
Suppose one purchased 20 shares @ $80, @ $75, @ $70, or
(20*80 + 20*75 + 20*70) = $4500
I think the OP suggested $8/trade, but let's use $10/trade, or $20 for the additional transactions.
That's $280 additional capital available for investing in one account.
Would the inefficiency occur every
year? Probably not. But it is still 5.8%

Your hypothetical assumes that the price will drop.

How can anyone assume that?

I believe in buying into a stock when it is undervalued (at the right price and with a "margin of safety", as Ben Graham would say) as much as the next guy.

But with a well-known, heavily followed stock like BRK-B, what are the odds that it is ever going to be seriously undervalued?

My guess is that when Mr Buffett passes, the price will drop significantly and we might see it undervalued for a time.

The only other time it will become undervalued is if the stock market as a whole takes a dive, at which point everything is undervalued and relatively speaking BRK won't be undervalued any more than any other stock.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev | Next


Motley Fool Income Investor
Are you a dividend-savvy investor? Check out our Income Investor newsletter.
Post of the Day:
Macro Economics

Hail to the Index Fund
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.