The financial company he became a director for was Salomon Brothers, and he owned most of the company. He joined the board after the company illegally tried to gain a monopoly on Treasury bonds sales and almost wrecked the world’s economy.

Personally, I also sleep well with my money invested in Vanguard index funds. The great majority of managed funds can’t beat the market… if you can’t beat it, why not be it? =)

As for margin, it’s not that complicated. It’s a secured loan with 10% interest. At any given time I have a fraction of a share on margin (averaging 50% of a share, of course). Because Berkshire has such huge cash reserves, it would be virtually impossible for the stock price to hit 50% and thus trigger a margin call.

I will checkout those two firms you mentioned, but for now I’m happy with Berkshire.

Tynan

Past results are not an indicator of future returns. Don’t use margin unless you are an experienced investor and have educated yourself. As a former investment banker and trader (I’ve traded and learned from some of the best traders-including for BERK-on the floors of the CBOE and NYSE), I urge you to thoroughly educate yourself first before taking investment advice from this blog.

If you like WB Value investment philosophy look into diversifying in other quality value investment management firms. I personally love ‘Value’ and it offers the most value to me and my lifestyle. There aren’t too many great ones (that aren’t already closed to new investors), but two excellent firms off the top of my head are Century Management Parners (ironically Austin based) and Brandes Investment Partners out of La Jolla, CA. Both are impecable with superior returns. I’ve met both of the firms personally and they have similar Value investing philosophies to WB (Brandes is known for international holdings-Read Charles Brandes’ book). By my professional definition, “Value” mean the holdings should be 30-50% below book value when purchased by the portfolio manager.

Ty, stick to just being awesome. Cheers mate.

I know that BRK owns a lot of different companies (and a large horde of cash, which is kind of like owning bonds), but personally, I sleep better at night having the bulk of my long-term investments in low-cost mutual funds from Fidelity and Vanguard.

He has pledged 5% of his shares yearly to Bill Gates’ foundation.

It’s not a perfect investment, but it’s as close as possible.

Tynan

My point of all this is that I think it’s unrealistic to think the stock will perform at 23%, and certainly not on a consistent basis. The natural of all stocks is to be volitile, and if you look at the history of the stock, while it certainly has risen over time, it’s had down periods as well. I think it’s fair to differentiate the private period from the public period. If it has grown at an average of 23% since he took it over, and at 17% since it went public, it grew at more than that from the time he took it over till it went public.

Ty, considering the stock’s performance since it’s gone public, you might want to reconsider your strategy of always owning one share on margin. If you take 10% out of the numbers I quoted above, that’s a big chunk.

Another thing to consider, is that hasn’t Buffet pledged almost all of his fortune to Bill Gates’ charity? I’m assuming Buffet owns a serious percentage of the total of Berkshire Hathaway. I’m not sure what happens after the money is gifted to the charity — whether it holds it as stock or sells it off, but that could also add some uncertainty to the equation, if a decent amount of Berkshire’s stock is going to be sold off over the next few years.

I’m concerned about Buffet’s age as well, and am not quite as optimistic as Ty is.

Anyway, I would recommend for everyone to check out the stock using Yahoo’s great new stock tool! The best part is you can drag it graphically (on the bottom right, where it says “time range”) to see the performance at various points in time:

Its ticker symbols are BRK-A and BRK-B