Warren Buffett is the world's most famous asset manager. Over the weekend, his company once again crushed market expectations during its earnings report. Here's what you need to know about Buffett's firm moving forward.
| | | | | | For Warren Buffett's Next Trick… |
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| Dear Reader,
Berkshire Hathaway is a stock that everyone should own for the long term.
The company did not have the highest return of 2021, 2020, or 2019.
It seems almost dull.
But the Buffett-operated company never fails to impress me.
The motto that Warren Buffett follows (unspoken, as far as I know) is, among other things, that "time period" is more important than the supposed best time to buy a stock.
Simply put, it's better to be a long-term investor than a short-term trader.
That would describe his track record with Berkshire Hathaway.
According to his reports, the investment firm has averaged a good 20% return per year for more than 50 years.
With that rate of return, you could become a millionaire with even the smallest of investments.
If you want to build and grow wealth over the long term, achieving these returns will be almost impossible if you were always looking for the best time to invest.
I often ask myself whether a stock is particularly worth buying at a certain time.
However, the famous "timing" problem rarely arises when you are seeking the highest returns over long-term periods.
Berkshire Hathaway, the holding company that has been so successful, will continue to be successful in the future, I believe, not so much because of individual high returns but because of its impressive consistency. Now the company is using its high cash balance to buy back shares.
This is a gift to you as an investor.
And It's Sitting on $144 Billion in Cash
According to the latest report, the company has just over $144 billion in cash. Berkshire Hathaway reduced the cash on hand somewhat from what was previously more than $145 billion, using it to buy back about $6 billion worth of shares.
The second quarter was strong anyway:
- Net income climbed to $6.7 billion.
- Revenue rose 21.8% from the year-ago quarter.
- Earnings per share climbed to $4,400. Analysts had predicted in advance of the reporting had expected earnings of $3,768 per share.
Also, currently, it proves itself if you bring along long-term patience with this share or this company.
So the investment strategy seems to work for the time being - in my expectation for many years.
Now I'm not expecting everyone to go out and buy A shares of this stock.
After all, BRK.A stock trades at more than $433,000 per share.
But you can buy the so-called B-share, which is a fraction of the actual share.
The ticker is BRK.B.
The B-share should increase the tradability by a lower share price.
This has been successful. Buffett's Berkshire Hathaway, I think, is a better investment than most funds or ETFs, even if you believe and invest for the long term. Time frame is a better calculator for this than timing. Even now, the stock is worth investing in at any time.
And if you're looking for an even more exciting way to play Buffett's stock, my colleague Garrett Baldwin will discuss a "back-door" trade that few investors know much about.
He'll discuss this special Buffett fund on Wednesday.
In time, |
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| | | Dr. Gregor Bauer
Chief Analyst, European Markets |
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