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Subject:  Re: Evaluating a Stock with a "Higher" Date:  7/31/2008  9:28 PM
Author:  PaulEngr Number:  3666 of 3816

GE and Berkshire Hathaway (BRK) are kind of strange critters. They are real, publicly traded companies. However, the depth and breadth of their holdings makes them much different from your typical company. Both perform a lot less like stocks and more like mutual funds. Their senior management actually acts a lot more like fund managers. When it comes to investing in GE and Berkshire Hathaway, it's best to think of them in those terms. They have consistently produced mutual-fund like results that beat the pants off any high quality bond investment. So if you goal is long term buy-and-hold, then it doesn't matter at all what the price is. Just buy any time and hold. Even if you bought when the price was a bit high or low, within a couple years, this difference will be quickly erased. The downside of these kinds of companies is that there is very little chance of getting multibagger results. The upside is that they are going to plod along at the same pace almost without regard to the market around them over the long term.

Another example is if you are doing dollar-cost-averaging. This is a type of long term buy-and-hold strategy where you invest small amounts of money on a regular basis to smooth out the "bumps". Instead of predicting when the stock price is excessively high or low, the goal is to simply buy the stock at any price at regular intervals. Sometimes it will be high and sometimes it will be low, but with enough intervals, you will be buying at an average price.
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