You Made Me Rich! … Now What Do I Do?

Hi Scott,

Twelve years ago (May 2006), you wrote an article in the Herald Sun talking about why you were buying shares in Warren Buffett’s Berkshire Hathaway. I know the date because I followed your advice, and I am very glad I did!I remember looking at the share price at the time and was astounded that a single share could be worth $59.Well, it is worth $217 a share!Even better, the Aussie dollar has gone down since my purchase, so I am sitting on a 350% total return.I am wondering whether I should sell, because I could use the money to pay off my mortgage. And Warren Buffett, now 88 years old, is older than my grandmother. How long can he go on for?What are you doing with your Berkshire Hathaway shares?

Nina

Hi Nina,

I hope you bought a lot of shares!

If you thought the Berkshire Hathaway’s shares were expensive, just remember that what you bought was ‘Class B’ shares. The original ‘Class A’ shares are currently trading for $450,000 per share in Aussie dollars. That’s for just one share.

Yes, Berkshire is currently trading at all-time highs, for two main reasons:

First, Buffett’s decision to invest in his own shares, via a share buy-back.In other words, the greatest investor in history is essentially telling investors that he thinks his stock is cheap.

(Who are we to argue?)

And second, the US stock market is also at all-time highs. However, Berkshire is sitting on around billion in cash, presumably waiting to be greedy when other people are fearful.

For all these reasons, I’m not going to be selling mine. However, I’m in a different situation to you, and I don’t have a mortgage. Just make sure you need to factor in capital gains tax (CGT) when you eventually decide to sell your shares.Well done!

Scott