Welcome to my “daily comment.” The ground rules Ceres and I have agreed to are simple. I can write whatever I want, ranging from a sentence to an epic, and nothing is off limits. I can even say things like, “Don’t trade stocks yourself — for most people, it’s smarter to invest through no-load mutual funds.” Which it is.
You may have noticed that Warren Buffett announced for the first time ever he’d be selling Berkshire Hathaway stock. Not his own, $100 million of new stock — but since he controls half the existing stock, it’s at least half like selling shares of his own.
He had a lot of good reasons — for example, at $32,000 a share, giving a child even one share exceeds the annual gift tax exemption — and so he wanted to issue a new class of shares in piddly little $1,000 chunks, 30 of which would equal a “real” share.
Still, the smartest investor in the world was selling Berkshire Hathaway stock (another reason: “it’s not exactly selling at a bargain price,” he said, or words to that effect). So what did the market do? It immediately bid the price of BRK up another $2,000 a share. If Buffett was selling, the market figured, it must be yet another brilliant move for Berkshire Hathaway, and so yet another reason to buy.
And, given my track record on BRK — consistently recommending it from $300 a share right on up to its current $34,000, except consistently advising people to “wait until it falls back a little, however,” and thus never once snagging even a single share my sorry old self — I will admit the irony I find in this is probably misplaced. The market is probably right. Whatever Buffett does, whatever press release is issued, is always reason to bid the stock up. Even if the news is that he’s selling a little. (And again, to be clear, he’s selling just a very little, and only indirectly.)
I have no doubt that the extra $100 million BRK raises this way will be put to good use, and that I will again have missed a good opportunity to jump on board. But, as usual, I think the stock is a little ahead of itself.
Tomorrow: The Mayor of San Francisco
