Berkshire Hathaway Class B

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Snaber
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Berkshire Hathaway Class B

Post by Snaber » Mon Jul 18, 2016 4:35 pm

Hi everyone

I have a question for all of you. I used to have investments in several mutual funds and some stocks, and then this past March I overhauled everything and took a Boglehead approach and now have all my Vanguard and 401K investments in Vanguard index funds divided in 20%bonds/20%international/60%stocks.

I recently talked to an old friend (who actually first introduced me to Vanguard back in 2004), and we started talking investments, and he has said that his 2 biggest regrets financially have been not having started to contribute to his retirement accounts earlier, and not getting in on Berkshire Hathaway stocks early on.

He said that I should really consider just buying a good sum, like 100 shares, of the class B stocks (they are at $146.57 now), and just leaving them untouched there. He says the way they have their companies, owning BH stock is like owning a mutual fund. He believes the class B's are following the same path that the class A's did that made people very rich in the long run.

What do you all think? Should I follow the advice and buy a good chunk of BH Class B stock? Or should I just stick with my 3 index funds for now?

Or should I buy some BH Class B, but start off small, like maybe 10 stocks, and just add a little every month like I do with my other index funds?

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Re: Berkshire Hathaway Class B

Post by celia » Mon Jul 18, 2016 4:50 pm

I own it and think of it as a mutual fund, as far as diversification. But it is heavily weighted in the insurance industry.

Class A and B shares own the same assets. The only difference is in some voting rights. When Class B shares were started, they split Class A shares into 50 Class B shares, so that it would be more affordable for people to buy. Both classes will grow the same per cent each year, so in a way your friend is right about the growth, but he is wrong that it will happen just because it happened in the past.
Last edited by celia on Mon Jul 18, 2016 5:01 pm, edited 1 time in total.
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Re: Berkshire Hathaway Class B

Post by Teague » Mon Jul 18, 2016 5:01 pm

The best thing about owing a little Berkshire, IMHO, is that you will be inclined to read the annual report, and will likely learn something new each year by doing so. Also, if you want to go, you are invited to the annual meeting in Omaha. As an investment I think it is fairly good to so-so, certainly not a bad investment. But I don't expect it to outperform anything in particular.
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Re: Berkshire Hathaway Class B

Post by alex_686 » Mon Jul 18, 2016 5:04 pm

A shares and B shares move or less in lockstep. One can always buy the A shares, convert them to the B shares, then sell the B shares to make free money if the prices between the 2 become too divergent.

What your friend is saying about Berkshire Hathaway is factually true but I think fundamentally wrong. Berkshire Hathaway is a well run company today but that may not be true tomorrow. I doubt that any one part of Berkshire would every blow up and take down the entire company but it could happen.

I own individual shares of BH B. I purchased back before it was in the S&P 500 index. I might view it as a enhancement - as a single company bet. I would never treat it as a substitute for a mutual fund or even a value mutual fund. As they say, past performance does not signify future performance.

By the way, I am not sure I would call BH a small cap value company. It has a huge exposure to the large cap insurance and banking industry.

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Re: Berkshire Hathaway Class B

Post by selftalk » Mon Jul 18, 2016 5:04 pm

I was thinking of buying brk.b when it fell to about $124 in a correction a while ago but decided to stick with VTI which isn`t managed by people in a sense. I felt that Berkshire wasn`t as safe going forward and certainly not diversified near as much as the index and that Warren Buffett is in his 80`s although new management could possibly be better than Buffett but why take a chance so I stayed put. Even though it`s about $146 now it really doesn`t phase me.

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Re: Berkshire Hathaway Class B

Post by soboggled » Mon Jul 18, 2016 5:07 pm

Why has it been it such an outstanding success? Some people say because of sheer luck, others say because of Warren Buffet. So how long do you expect sheer luck and/or Warren Buffet to hold out?

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Re: Berkshire Hathaway Class B

Post by spectec » Mon Jul 18, 2016 5:15 pm

I agree with your friend that Brk-B in actuality is more like a mutual fund than an individual company. One unique aspect of BH is that you get to own shares of very good companies which are not public traded. I also expect the company to do well in the future, with or without Warren Buffet & Charlie Munger at the helm. I expect that their demise is already baked into the price, but who really knows? Warren Buffet has repeatedly said that his investment philosophy is well-ingrained in the company, but again who really knows?

I disagree with your friend on the future growth of the company . It probably can't achieve the spectacular gains of the past. But I'm in good company because Warren Buffet has said the same thing.

BH is also very tax-efficient. Since it isn't a mutual fund is never throws off capital gains. And since it doesn't pay dividends, it is entirely a source of LTCG if you find yourself needing to pay yourself some "dividends" by selling a few shares (on your time schedule).
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Re: Berkshire Hathaway Class B

Post by TomatoTomahto » Mon Jul 18, 2016 5:28 pm

spectec wrote:BH is also very tax-efficient. Since it isn't a mutual fund is never throws off capital gains. And since it doesn't pay dividends, it is entirely a source of LTCG if you find yourself needing to pay yourself some "dividends" by selling a few shares (on your time schedule).

We had owned one share of BRK.A and some shares of BRK.B. For reasons having nothing to do with BRK, we sold the B shares some time ago. The A share has too much LTCG in it to sell; I know that we could trade it for B shares, but I'm happy that it doesn't throw off dividends or cap gains, and it might be a good stock to bequeath.

We only own one share of an individual stock. :oops:

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Re: Berkshire Hathaway Class B

Post by 123 » Mon Jul 18, 2016 5:28 pm

Berkshire Hathaway Class B is okay to have. We have some and just treat it as an index fund for the most part. Less then 5% of our portfolio but hey we've got Warren working for us.
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Re: Berkshire Hathaway Class B

Post by nisiprius » Mon Jul 18, 2016 5:51 pm

Snaber wrote:...he has said that [one of] his 2 biggest regrets financially [has] been not getting in on Berkshire Hathaway stocks early on....
He regrets not getting in on it early, so he's suggesting that you get in on it later than he did. Do you see a problem here?
...owning BH stock is like owning a mutual fund...
No, it isn't, and I wish really people would stop saying this.

There's a case to be made that Berkshire Hathaway stock is a very good stock, that it is from a large company in a diversified mix of businesses, and that it therefore is more diversified and less risky than some smaller companies. Maybe.

But it is not "like owning a mutual fund." A mutual fund is subject to the regulations of the Investment Company Act of 1940, which provides certain protections to the owner of mutual funds. An individual stock is not subject to those regulations and does not provide these same protections.

Among these requirements are:

--a mutual fund company itself is directly responsible for guaranteeing daily liquidity in its shares, must redeem them at end-of-day NAV, and must settle the redemption within seven days;

--In order to provide that liquidity it's required to invest 85% of its portfolio in liquid assets;

--diversified funds must meet some requirements that BRK doesn't meet, such as not owning more than 10% of the outstanding shares of any single issuer (whereas BRK owns 100% of Benjamin Moore, Dairy Queen, Duracell, Fruit of the Loom, GEICO, etc.);

--it is prohibited from using more than 33% leverage.

Now, you may feel that these requirements aren't important, or don't really provide protection, or that you don't need them or want them. However, they mean that no company's individual stock, including BRK's, is "like a mutual fund."
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Re: Berkshire Hathaway Class B

Post by Boglegrappler » Mon Jul 18, 2016 7:13 pm

As an investment I think it is fairly good to so-so, certainly not a bad investment. But I don't expect it to outperform anything in particular.


You're in good company. People have had those expectations for decades, and the company has outperformed consistently. Up 3000% since 1990.

BRK is a bit like a mutual fund in that it's actively managed by Buffett and his cohorts, and they've done pretty well. They aren't subject to the '40 act, but that's probably a good thing in many ways.

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Re: Berkshire Hathaway Class B

Post by spectec » Mon Jul 18, 2016 7:48 pm

Recognizing some key differences, I believe BH is better than a mutual fund. Maybe a more accurate description would be that it is a proxy for a highly specialized mutual fund (rather than "like" a mutual fund). With tax efficiencies better than an index fund and an expense ratio of zero.
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Re: Berkshire Hathaway Class B

Post by investor » Mon Jul 18, 2016 11:58 pm

Have had BRK.b shares for long time. Good place to be. Think when Buffet dies it will still be a good investment. Also it is good in a taxable account as it has zero tax liability unless you sell some shares…no dividends to be taxed

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Re: Berkshire Hathaway Class B

Post by triceratop » Tue Jul 19, 2016 12:05 am

Owning a single share of BRK.B has proved useful to me in acquiring a GEICO car insurance discount; I believe the rate is 8%.

The capital appreciation hasn't been bad either, but it's only a few 10s of dollars.
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Re: Berkshire Hathaway Class B

Post by technovelist » Tue Jul 19, 2016 12:06 am

But it doesn't pay any interest or dividends. Doesn't that make it a speculation rather than an investment? :confused
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Re: Berkshire Hathaway Class B

Post by moneywise3 » Tue Jul 19, 2016 5:39 am

It is not truly diversified. Has S&P 500 not made people rich in the past? Part of it's success can be attributed to one guy, who may not be around forever. So I would stick to Bogleheads approach. Also factor in extra trading costs and time spent to review annual reports etc.

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Re: Berkshire Hathaway Class B

Post by moneywise3 » Tue Jul 19, 2016 5:42 am

triceratop wrote:Owning a single share of BRK.B has proved useful to me in acquiring a GEICO car insurance discount; I believe the rate is 8%.

The capital appreciation hasn't been bad either, but it's only a few 10s of dollars.

That discount is available through multiple means.

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Re: Berkshire Hathaway Class B

Post by spectec » Tue Jul 19, 2016 6:55 am

technovelist wrote:But it doesn't pay any interest or dividends. Doesn't that make it a speculation rather than an investment? :confused


Funny definition of "speculation", IMO. Investing in a well-managed company which doesn't pay dividends is essentially the same as reinvesting dividends in a mutual fund, except you don't take the tax haircut. Besides, if you don't trust a company's management enough to be good stewards of your dividends, why would you trust them with any of your money in the first place? Dividends are a tax-inefficient illusion.
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Re: Berkshire Hathaway Class B

Post by SGM » Tue Jul 19, 2016 7:53 am

I am paying a lot more in taxes since I decided to diversify out of Berkshire into index funds. This is a downside of indexing for me, but I chose to live with additional yearly taxes to diversify in a low cost manner. With Berkshire there were no dividends and taxes were not paid until I sold the stock. We still have a few shares of Berkshire Hathaway B and once had the good fortune of having Berkshire grow to be too large a part of our portfolio.

It has some characteristics of a mutual fund in that it has put cash into individual stocks so it is more diversified than most individual stocks. It is not strictly a mutual fund but that in itself is not a reason to avoid it. Because it is less diversified it is more speculative than owning the total stock market. If you want to speculate less then do not own it and own VTI, the total stock market ETF. If you want to speculate even less put everything in CDs, not that I recommend that strategy.

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Re: Berkshire Hathaway Class B

Post by inbox788 » Tue Jul 19, 2016 7:56 am

spectec wrote:
technovelist wrote:But it doesn't pay any interest or dividends. Doesn't that make it a speculation rather than an investment? :confused


Funny definition of "speculation", IMO. Investing in a well-managed company which doesn't pay dividends is essentially the same as reinvesting dividends in a mutual fund, except you don't take the tax haircut. Besides, if you don't trust a company's management enough to be good stewards of your dividends, why would you trust them with any of your money in the first place? Dividends are a tax-inefficient illusion.

I never received a satisfactory explanation about the tax consequences of the dividends Berkshire receives from its investments, which is substantial. I'm sure we're paying taxes on them, and might even be doing it twice, but there is an element of tax deferment.
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Re: Berkshire Hathaway Class B

Post by abuss368 » Tue Jul 19, 2016 10:29 am

I would not consider Beekshire like a mutual fund. I would also be cautious about past performance is a good indication of future performance. The last few years, Warren Buffett has said Berkshires results will probably be much different going forward as they are so large now.

Not to sound gloomy but what happens when Mr. Buffett is no longer guiding the ship?
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Re: Berkshire Hathaway Class B

Post by Boglegrappler » Tue Jul 19, 2016 2:35 pm

Buffett has been saying for several decades that he can't keep doing this. I wish I had not believed him. ;)

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Re: Berkshire Hathaway Class B

Post by FelixTheCat » Tue Jul 19, 2016 2:40 pm

I already own Berkshire via Vanguard's Total Stock Market Index fund.

Month-end ten largest holdings as of 06/30/2016
Rank Holdings
1 Apple Inc.
2 Alphabet Inc.
3 Exxon Mobil Corp.
4 Microsoft Corp.
5 Johnson & Johnson
6 General Electric Co.
7 Amazon.com Inc.
8 Berkshire Hathaway Inc.
9 AT&T Inc.
10 Facebook Inc.
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Re: Berkshire Hathaway Class B

Post by spectec » Tue Jul 19, 2016 3:15 pm

I think that # 8 position makes BH 1.22% of VTI.
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Re: Berkshire Hathaway Class B

Post by alex_686 » Tue Jul 19, 2016 3:28 pm

inbox788 wrote:I never received a satisfactory explanation about the tax consequences of the dividends Berkshire receives from its investments, which is substantial. I'm sure we're paying taxes on them, and might even be doing it twice, but there is an element of tax deferment.
http://www.barrons.com/articles/warren- ... 1428726092


Your article is behind a paywall so I can't see it. I am pretty sure that the Dividends Received Deduction (DRD) comes into play. There are many wrinkles to that law but in short it says you a 80% reduction on taxes from dividends. If you pull tax statements from your mutual funds you should see a DRD column next to your QDI.

https://en.wikipedia.org/wiki/Dividends ... _deduction

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Re: Berkshire Hathaway Class B

Post by spectec » Tue Jul 19, 2016 4:00 pm

alex_686 wrote:
inbox788 wrote:I never received a satisfactory explanation about the tax consequences of the dividends Berkshire receives from its investments, which is substantial. I'm sure we're paying taxes on them, and might even be doing it twice, but there is an element of tax deferment.
http://www.barrons.com/articles/warren- ... 1428726092


Your article is behind a paywall so I can't see it. I am pretty sure that the Dividends Received Deduction (DRD) comes into play. There are many wrinkles to that law but in short it says you a 80% reduction on taxes from dividends. If you pull tax statements from your mutual funds you should see a DRD column next to your QDI.

https://en.wikipedia.org/wiki/Dividends ... _deduction


I'm uncertain what the significance of the question is in the first place. Regardless of how much BH pays in taxes on dividends received from the companies it owns all or part of, the fact remains it's a phenomenal company with unique leadership. Leadership which has shown itself to be wonderful stewards of the money it did not pay out in tax-reduced dividends. Apparently the shareholders agree with that assessment, because a small shareholder tried to put the "non-dividend" policy to a vote a couple of years back. The proposal was rejected by the shareholders. They are perfectly happy to allow Buffet/Munger & company to manage the earnings & grow the value of the company. Anyone who wants a dividend can sell a few shares, at their discretion.
Last edited by spectec on Tue Jul 19, 2016 4:10 pm, edited 1 time in total.
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Re: Berkshire Hathaway Class B

Post by Boglegrappler » Tue Jul 19, 2016 4:02 pm

The article focuses on BRK not paying dividends to its holders. This makes a lot of sense for various reasons.....partly tax-driven, but the biggest being that Buffett is clearly better than most holders are at deciding how to invest.

That's a completely different issue from what happens within the company and how capital is reallocated from businesses that produce a lot of income and have no great need for reinvestment to those who need reinvestment, or more often, in Buffett's case, to new acquisitions of good businesses.

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Re: Berkshire Hathaway Class B

Post by technovelist » Tue Jul 19, 2016 6:09 pm

spectec wrote:
technovelist wrote:But it doesn't pay any interest or dividends. Doesn't that make it a speculation rather than an investment? :confused


Funny definition of "speculation", IMO. Investing in a well-managed company which doesn't pay dividends is essentially the same as reinvesting dividends in a mutual fund, except you don't take the tax haircut. Besides, if you don't trust a company's management enough to be good stewards of your dividends, why would you trust them with any of your money in the first place? Dividends are a tax-inefficient illusion.


But that is the definition that many people on this board use to declare that gold is not an investment. Since it doesn't pay interest or dividends, the only way to profit is to sell it to someone at a higher price.

Since the same is true of BRK, then that should not be an investment either...
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Re: Berkshire Hathaway Class B

Post by spectec » Tue Jul 19, 2016 6:34 pm

Oh please...
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

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Re: Berkshire Hathaway Class B

Post by Boglegrappler » Tue Jul 19, 2016 9:39 pm

But that is the definition that many people on this board use to declare that gold is not an investment. Since it doesn't pay interest or dividends, the only way to profit is to sell it to someone at a higher price.

Since the same is true of BRK, then that should not be an investment either...


Not sure how much is tongue in cheek, but many of the posts on this board demonstrate so much ignorance of investment that my thoughts are often that Jack Bogle has really performed a terrific public service. I don't mean that quite as harshly as it sounds, but its applicable.

In any case, the point made about gold isn't simply that it doesn't pay interest or dividends (although that is true). It's that it doesn't earn anything.

That is not true of BRK. Over the past three years, BRK earned about 64 billion. It is true that it didn't pay anything out to shareholder, but the earnings make it more valuable......regardless of whether the quoted market price reflects it.

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Re: Berkshire Hathaway Class B

Post by abuss368 » Tue Jul 19, 2016 10:03 pm

I usually read the annual Shareholder letter written by Warren Buffett.
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Re: Berkshire Hathaway Class B

Post by alex_686 » Tue Jul 19, 2016 10:20 pm

Boglegrappler wrote:
But that is the definition that many people on this board use to declare that gold is not an investment. Since it doesn't pay interest or dividends, the only way to profit is to sell it to someone at a higher price.

Since the same is true of BRK, then that should not be an investment either...


Not sure how much is tongue in cheek, but many of the posts on this board demonstrate so much ignorance of investment that my thoughts are often that Jack Bogle has really performed a terrific public service. I don't mean that quite as harshly as it sounds, but its applicable.

In any case, the point made about gold isn't simply that it doesn't pay interest or dividends (although that is true). It's that it doesn't earn anything.

That is not true of BRK. Over the past three years, BRK earned about 64 billion. It is true that it didn't pay anything out to shareholder, but the earnings make it more valuable......regardless of whether the quoted market price reflects it.


To extend, the value of a stock is its future cash flow. The math behind the financial theory does not care much if you pay out now or payout latter. If a company have internal projects that offer better returns than the market the logical choice is to let the company reinvest in its internal projects instead of giving you the profits to invest on your own.

Now, how do we know if a company has internal projects that will generate a niffy above market returns? We don't. The average company splits the difference - pay some of the profit out (dividends or a buyback) and reinvests the rest. The reinvested amount will cause (hopefully) the dividend to grow.

Warren Buffet has convinced BRK's shareholders that he has the profitable internal projects and that the shareholders should trust him. Delayed gratification for some huge payout at the end. Microsoft and Apple have been down the same road. During their growth years their reinvested every last penny of their profits back into their companies, delaying their divined payouts so they could offer higher payouts. At some point BHK will become a normal company and start returning cash.

Gold never will.

As a counterpoint, take a look at how REITs are structured and how they generate returns. They are the anti-BHK. They must payout almost all of their profits. Most companies are in the middle.

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Re: Berkshire Hathaway Class B

Post by technovelist » Tue Jul 19, 2016 10:25 pm

Boglegrappler wrote:
But that is the definition that many people on this board use to declare that gold is not an investment. Since it doesn't pay interest or dividends, the only way to profit is to sell it to someone at a higher price.

Since the same is true of BRK, then that should not be an investment either...


Not sure how much is tongue in cheek, but many of the posts on this board demonstrate so much ignorance of investment that my thoughts are often that Jack Bogle has really performed a terrific public service. I don't mean that quite as harshly as it sounds, but its applicable.

In any case, the point made about gold isn't simply that it doesn't pay interest or dividends (although that is true). It's that it doesn't earn anything.

That is not true of BRK. Over the past three years, BRK earned about 64 billion. It is true that it didn't pay anything out to shareholder, but the earnings make it more valuable......regardless of whether the quoted market price reflects it.


The fact remains that the only way a holder of BRK can benefit from the increase in the price of BRK is to sell their BRK to someone else.

Just as the only way a holder of gold can benefit from a rise in the price of gold is to sell their gold to someone else.

The fact that some people claim that one of these is an investment while the other is a speculation is a matter of psychology, not economics.
In theory, theory and practice are identical. In practice, they often differ.

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Re: Berkshire Hathaway Class B

Post by technovelist » Tue Jul 19, 2016 10:27 pm

alex_686 wrote:
Boglegrappler wrote:
But that is the definition that many people on this board use to declare that gold is not an investment. Since it doesn't pay interest or dividends, the only way to profit is to sell it to someone at a higher price.

Since the same is true of BRK, then that should not be an investment either...


Not sure how much is tongue in cheek, but many of the posts on this board demonstrate so much ignorance of investment that my thoughts are often that Jack Bogle has really performed a terrific public service. I don't mean that quite as harshly as it sounds, but its applicable.

In any case, the point made about gold isn't simply that it doesn't pay interest or dividends (although that is true). It's that it doesn't earn anything.

That is not true of BRK. Over the past three years, BRK earned about 64 billion. It is true that it didn't pay anything out to shareholder, but the earnings make it more valuable......regardless of whether the quoted market price reflects it.


To extend, the value of a stock is its future cash flow. The math behind the financial theory does not care much if you pay out now or payout latter. If a company have internal projects that offer better returns than the market the logical choice is to let the company reinvest in its internal projects instead of giving you the profits to invest on your own.

Now, how do we know if a company has internal projects that will generate a niffy above market returns? We don't. The average company splits the difference - pay some of the profit out (dividends or a buyback) and reinvests the rest. The reinvested amount will cause (hopefully) the dividend to grow.

Warren Buffet has convinced BRK's shareholders that he has the profitable internal projects and that the shareholders should trust him. Delayed gratification for some huge payout at the end. Microsoft and Apple have been down the same road. During their growth years their reinvested every last penny of their profits back into their companies, delaying their divined payouts so they could offer higher payouts. At some point BHK will become a normal company and start returning cash.

Gold never will.

As a counterpoint, take a look at how REITs are structured and how they generate returns. They are the anti-BHK. They must payout almost all of their profits. Most companies are in the middle.


I assume you realize that gold has returned cash in the past, as it was lent and borrowed for interest.

The same could happen in the future.

So right now neither BRK nor gold returns cash, whereas in the future either, both, or neither may return cash.

I'm still not seeing how one is an investment and the other a speculation.
In theory, theory and practice are identical. In practice, they often differ.

dltnfs
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Re: Berkshire Hathaway Class B

Post by dltnfs » Tue Jul 19, 2016 10:32 pm

If you prefer, BRK currently pays no dividends because its shareholders have chosen that. At least in concept, they could all get together and ask Warren Buffett to start doing that and, if he declined, elect a board that would replace him.

There's no analogous mechanism for gold. I think it's a reasonable asset class, but that a long-term holding is neither quite speculation nor investment; I typically punt, and say something like "store money". No one is likely to pay me interest on my gold, unless they're lending it at risk (in which case, I'm exposed to something more than the price of gold; it's just a gold-denominated bond).

inbox788
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Re: Berkshire Hathaway Class B

Post by inbox788 » Wed Jul 20, 2016 3:40 am

alex_686 wrote:Your article is behind a paywall so I can't see it. I am pretty sure that the Dividends Received Deduction (DRD) comes into play. There are many wrinkles to that law but in short it says you a 80% reduction on taxes from dividends. If you pull tax statements from your mutual funds you should see a DRD column next to your QDI.

https://en.wikipedia.org/wiki/Dividends ... _deduction

I was able to see it just now going through Google. I think they're sponsoring the free access.
https://www.google.com/search?q=Warren+ ... x+Loophole

nolapepper
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Re: Berkshire Hathaway Class B

Post by nolapepper » Wed Jul 20, 2016 10:13 am

Can you share What other means to get discount? I happen to have Geico as my car insurance and would love to get some discount!

moneywise3 wrote:
triceratop wrote:Owning a single share of BRK.B has proved useful to me in acquiring a GEICO car insurance discount; I believe the rate is 8%.

The capital appreciation hasn't been bad either, but it's only a few 10s of dollars.

That discount is available through multiple means.

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Re: Berkshire Hathaway Class B

Post by technovelist » Wed Jul 20, 2016 11:43 am

dltnfs wrote:If you prefer, BRK currently pays no dividends because its shareholders have chosen that. At least in concept, they could all get together and ask Warren Buffett to start doing that and, if he declined, elect a board that would replace him.

There's no analogous mechanism for gold. I think it's a reasonable asset class, but that a long-term holding is neither quite speculation nor investment; I typically punt, and say something like "store money". No one is likely to pay me interest on my gold, unless they're lending it at risk (in which case, I'm exposed to something more than the price of gold; it's just a gold-denominated bond).


That is a reasonable position.

As far as getting income from gold, I would like to be able to buy a annuity from an insurance company that had both the premium and the payments in gold. Of course there wouldn't be any interest earnings (in today's world, at least), but the mortality credits would be as valuable as they are with other life annuities.
In theory, theory and practice are identical. In practice, they often differ.

wow!howmuch?
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Re: Berkshire Hathaway Class B

Post by wow!howmuch? » Wed Jul 20, 2016 9:30 pm

I'm rather excited due to I just bought 11 shares of BRK-B. Kind of fun. It is the only stock I own and will never go above 5% of my total assets. Otherwise I'm a boring vanguard and fidelity index/Boglehead.

As far as the side discussion of Gold (physical form of course) it plays many roles.....but for the last 60 centuries it IS money AND a store of wealth.


Gold has no yield because it has no risk. gold has no credit risk, no currency risk, no maturity risk. It is money par excellence.

Gold (physical) is not an investment. Investments require a return on capital and a return OF capital. With gold you already have your capital in your hand. That's why it is money and not an investment. No paper shares this quality.

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Re: Berkshire Hathaway Class B

Post by technovelist » Wed Jul 20, 2016 11:17 pm

wow!howmuch? wrote:I'm rather excited due to I just bought 11 shares of BRK-B. Kind of fun. It is the only stock I own and will never go above 5% of my total assets. Otherwise I'm a boring vanguard and fidelity index/Boglehead.

As far as the side discussion of Gold (physical form of course) it plays many roles.....but for the last 60 centuries it IS money AND a store of wealth.


Gold has no yield because it has no risk. gold has no credit risk, no currency risk, no maturity risk. It is money par excellence.

Gold (physical) is not an investment. Investments require a return on capital and a return OF capital. With gold you already have your capital in your hand. That's why it is money and not an investment. No paper shares this quality.


Yes, that is it. I'm not sure why this is even controversial.
In theory, theory and practice are identical. In practice, they often differ.

finite_difference
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Re: Berkshire Hathaway Class B

Post by finite_difference » Wed Jul 20, 2016 11:21 pm

triceratop wrote:Owning a single share of BRK.B has proved useful to me in acquiring a GEICO car insurance discount; I believe the rate is 8%.

The capital appreciation hasn't been bad either, but it's only a few 10s of dollars.


Note that I think this discount is state-dependent. In VA I don't think you can get this discount.

Edit: otherwise if you have GEICO, this alone is worth owning one share in my opinion!
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inbox788
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Re: Berkshire Hathaway Class B

Post by inbox788 » Thu Jul 21, 2016 7:11 am

TomatoTomahto wrote:We only own one share of an individual stock. :oops:


You just lost over $1000 on that share today!?!

219,187.00 Down 1,078.00(0.49%)

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TomatoTomahto
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Re: Berkshire Hathaway Class B

Post by TomatoTomahto » Thu Jul 21, 2016 7:47 am

inbox788 wrote:
TomatoTomahto wrote:We only own one share of an individual stock. :oops:


You just lost over $1000 on that share today!?!

219,187.00 Down 1,078.00(0.49%)


True, although I don't check daily :D
Lately it seems to correlate more with my bonds than my equities, but I don't have a theory as to why. If it goes down $100k, I'll look at it more closely. :sharebeer

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