With the market pullback on Friday, I think it is a good time for me to publish my first shared trade. (I was keeping it for later, but the price is very enticing now)
I am going to start sharing some of my basic trades here from time to time. Please note that this is for informational purpose only. If you decide to follow, please size your investment amount appropriately, and you invest at your own risk.
If you got any questions, feel free to leave a comment, I’ll offer my opinions.
The trade I am going to make is at the end of this post.
Last Thursday I got a random sales message about self-improvement. Typically if it was a website, I would click on the link to review their content to see if there’s any value.
However getting a SMS from a stranger like this is weird and most likely a spam, so I decided to ignore it initially.
The same afternoon after lunch, I saw that message in my inbox, and I had a cheeky thought. So I replied to it. Here’s what I wrote:
I did get a Thank you response, which made my day.
My First Shared Trade
Here you will find why I am buying, the risk and when I would consider selling.
Berkshire Hathaway B shares (BRK.B:NYQ) 22 August 2015
You know who Warren Buffet is right?? He’s the investment guru who earns the nickname Oracle of Omaha.
If you invested $1000 in Berkshire Hathaway in 1964, it would be worth $11.6 Million today!! If you regularly invest in Berkshire Hathaway to create an Avalanche of financial freedom, I can’t even comprehend how much it would be, when would you need to worry about your financials? When Hell freezes over!
I am buying at below $135. (Trading at $134 at 21 Aug market close)
Why am I buying:
The growth of Berkshire might not be as high as the early 1970s, but I think it is still a great company that would compound its return comfortably over time. It’s a simple stock to hold and forget about it.
It’s rare to get Berkshire at a cheap price. The book value of Berkshire is approx $100 per share from June 2015 quarterly results.
What is book value? It’s the value shareholders get when for some reason Berkshire is shutdown and selling all its assets away. Once it paid all its debt, the remaining value is $100 theoretically.
Warren has signaled many times he would buyback Berkshire shares if the price is lower than $120 (Price/book value ratio of 1.2). This gives Berkshire shares a virtual floor of support. The recent pullback in markets and the recent missed earnings have given us this rare opportunity to buy Berkshire at a good price.
Risk and when I might sell:
Obviously Warren and his lieutenant Charlie both are really old. They might not be in Berkshire for long. There would be a drop in share price when that does happen. I would not worry in the short term, they have groomed the next generation of leaders, if they do not perform as expected then I would consider selling.