Berkshire Hathaway: Should I Just Invest in the Icon? Investors Ask Natalie.

Warren Buffett at the 2015 SelectUSA Investment Summit. Wiki Commons. Used with permission.

Berkshire Hathaway: Should I Just Invest in the Icon? Investors Ask Natalie.
 
Dear Natalie,
Warren Buffett has proven himself to be one of the greatest investors of all time – a true GOAT. So, shouldn’t I just buy BRK.A or BRK.B and allow his magic to increase my wealth?
Signed, Just Want to Make it Easy
 
Dear It’s Only Easy When It Works,
 There is no question that Warren Buffett is a GOAT investor. However, having Berkshire Hathaway as your one and only love on Wall Street is not the best plan. There are many reasons why it’s a better idea to have an age-appropriate, diversified strategy that you rebalance 1-3 times a year. That plan is easy. It also earned gains in the Dot Com and Great Recessions and outperformed the bull markets in between. Berkshire Hathaway tends to shadow the S&P500, sinking when it plunges and rising when it recovers. BRK.A dropped by half during the Great Recession and financial crisis to $750/share on March 3, 2009, down from the previous all-time high of $149,200 (Dec. 10, 2007). Berkshire Hathaway was not one of the companies that was bailed out, and it still had a wipe-out. It took four years to crawl back to even – slightly sooner than the S&P500 (18 months). 
 
Didn’t everything take that long to recover? No. At the bottom of the Great Recession, some of our ETFs were super performers… The iShares Chile ETF (ECH) rocketed off a low of under $30/share to $80/share between Dec. 2008 and Dec. 2010, for gains of 167%. The iShares Australia ETF (EWA) scored similar gains (143%) over the two-year period. Having a slice or two of something that is hot adds performance to our plan. Those two natural resources rich countries performed better than financials and insurance in the wake of the developed world’s financial crisis. (Our analysis revealed this strength in time for our readers and retreat attendees to take action.)
 
Having an age-appropriate, diversified plan that we rebalance 1-3 times a year is important because if we just own one thing, we might think that one company is the problem, especially if we see gold, crypto, copper or another industry/company shooting the moon. We might be tempted to sell low, just as now you’re tempted to buy Berkshire Hathaway at an all-time high right now because the story is slightly more interesting than an S&P500 index fund. Many investors sell low in recessions. Our emotions prompt us to do the wrong thing in investing, until we master them with a solid plan.
 
Here are the 10 things I’ll cover in this blog.
 
Individual Companies vs. Funds
Diversification Matters
Warren Buffett is 94 years old
The L.A. Fires and Berkshire Liability
Berkshire Has a Lot of Cash on the Sidelines
Losses of $22.8 Billion in 2022
Bull Markets 
Bear Markets
Country Diversification 
Dollar Cost Averaging (vs. Buying High)
What’s Your Rebalancing Plan?
 
And here is more information on each point.
 
Individual Companies vs. Funds
Anytime we invest in one company instead of a fund (many companies), we are putting ourselves at greater risk. Boeing is the most recent example – a company that has lost -57% in share price since its highs of 2019, at a time when Wall Street has been on fire. However, there have been plenty of other examples of Wall Street darlings for performance or dividends, where that trajectory reverses direction and plunges before investors can react. It’s called a gap down. Click for a history lesson of General Electric (a former dividend darling), Boeing and more.
 
Because individual companies are more vulnerable, investors must have their radar up on the news and should be conducting frequent analysis on the forward trajectory. (There’s guaranteed to be bad news for Berkshire in the coming years when Warren Buffett passes.) Keeping up to date requires a lot of work and expertise.
 
When we have a fund, the number of companies smooths out the volatility of any one component. If you don’t have the extra time and experience to evaluate your holdings, or if you’re trying to make things easy, funds are a more appropriate choice than putting all of your eggs in one company.  
 
Diversification Matters
Having said that, it’s better to diversify into 10 funds than to just purchase SPY. The above examples of Chile and Australia illustrate that, as does the extraordinary performance of Bitcoin over the past two years.

 
It’s also important to remember that without the spectacular gains of the Magnificent 7*, the S&P500 would have performed at half the speed. (Click on the blue-highlighted words to learn more.) Berkshire’s impressive gains pale in comparison to many of our trillion-dollar technology companies, which is why we want to have large cap growth stocks (Nvidia, AI, technology), in addition to large cap value (Berkshire Hathaway, financials+).
*Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, Tesla
 

Berkshire Hathaway (blue) versus Nvidia (pink) over the last 3 years. MSN.com/Money. (c) Microsoft. Used with permission.

Value might offer stability if stocks were on sale and dividends were offering us income without compromising our principal investment. With U.S. stocks at an all-time high and value stocks full of credit risk and low-yielding, we’re using international value replacement funds in our sample pie charts. (We talk about this in greater depth at our Financial Freedom Retreat.) Over half of the S&P500 is at or near junk status. Berkshire Hathaway has a great credit rating, at AA, but doesn’t pay a dividend.
Berkshire has flat sales growth (1.65%), while the Fantastic 5 all have revenue growth of 10% (Amazon) to 78% (Nvidia). When we think of this in terms of what we are buying from the company, how much more insurance, ice cream or See’s Candy are we going to consume? Most of us are heavily reliant on technology, which is finding ever more ways to monetize our addiction. Value means “on sale,” however, Berkshire Hathaway is trading at an all-time high (expensive). Email [email protected] with Berkshire Hathaway and Magnificent 7 SRC in the subject line for updated Stock Report Cards.
 
Having an age-appropriate, diversified plan that we rebalance 1-3 times a year is a “capture gains” plan that keeps our wealth growing in the bull markets and protected from the bears. As I mentioned above, our 2009 hot fund picks more than doubled within 24 months, while U.S. stocks took twice as long (or more) to recover lost ground. There are certain assets that will do better in the launchpad off the bottom. This is why we have four hot slices in our diversified wealth plan. At the top of the market, at a time when the economy is expected to slow down, investors might even consider a safe haven hedge for one or more of their hot slices, while overweighting a little more safe. In my recent interview with Howard Silverblatt, the senior index analyst of the S&P500, he encouraged investors to consider small caps which typically outperform large caps.
 
Check out our Sample Pie Chart below.

Sample Pie Chart c/o NataliePace.com. This will make more sense if you read The ABCs of Money (6th edition) and attend our online Financial Freedom Retreat.

Warren Buffett is 94 years old
The man who built Berkshire Hathaway is 94 years old. While Warren Buffett has faith in Berkshire Hathaway’s C-Suite and succession plan, the executives have yet to prove themselves. You’re investing in a man who will not be a part of the strategy going forward.
 
The L.A. Fires and Berkshire Liability
Berkshire Hathaway is the largest property and casualty insurer in the U.S. According to their 2024 Annual Earnings Report, the company expects $1.3 billion in pre-tax losses due to the January 2025 wildfires in Southern California. This could start showing up in the 1st quarter 2025 earnings report, which will be released at the beginning of May. Wall Street moves fast and furious these days. A bad earnings report can tank a share price.
 ​
Berkshire Hathaway Has a Lot of Cash on the Sidelines
Stocks are expensive. So, it’s not a surprise that Warren Buffett’s company has a lot in cash and short-term treasuries, as he’s one of the most famous value investors of all time. It’s a reminder that we should all have an age-appropriate plan and the proper amount safe. Having a lot on the sidelines could also slow down the performance of Berkshire Hathaway stock going forward. Flat year over year revenue growth doesn’t get investors excited.
 

Losses of -$22.8 Billion in 2022
Insurance companies can have very volatile earnings reports and tend to plunge in recessions due to the amount of money they invest in stocks and other risky investments. Berkshire Hathaway had losses of -$22.8 billion in 2022. When the S&P500 dropped -19.44% that year, many of the companies that Berkshire held sank in share price. AIG, one of the largest annuity providers, reported a net loss in half of the past eight years. Manulife and Prudential both lost $1.5-$1.65 billion in 2022.
 
Bull Markets 
If you look closely at the 3-year chart below, you’ll see that Berkshire Hathaway and the S&P500 were dancing together on Wall Street, moving up and down in tandem. It was only in the last month that Berkshire Hathaway decoupled and rose.

It’s a reminder to never confuse a bull market with wisdom, particularly since we don’t receive a warning before a correction. Everything dropped precipitously in the pandemic – in just one month’s time… including Berkshire Hathaway. The same thing happened in the Great Recession. Everything is on fire on Wall Street today, with prices at all-time highs – very expensive. Investors are happy.
 
Bear Markets
Corrections, recessions and bear markets are a normal part of a business cycle. It’s hard to remember that because we’ve essentially been in a secular bull market since the Great Recession. The pandemic was papered over with trillions of Stimmy Money, which contributed to the inflation mess and debt crisis we are navigating today. We don’t get forewarnings on recessions and bear markets. Economists are terrible at predicting them, and politicians duct tape their mouths until the crisis demands the truth (such as a TARP bailout). By the time recessions are called, we are far closer to the bottom and would be selling low.

Country Diversification 
Part of the reason that we have style diversification is for the income. With stock prices so high, the yields of many U.S. value funds are pretty low. (Berkshire Hathaway doesn’t offer income, only, potentially, share price gains.) The U.S. is no longer a AAA-rated country. We are substituting other countries for our value funds, many of which offer more income, sometimes with less risk. Australia is a AAA-rated sovereign, and many of the banks held within the fund are rated higher than U.S. banks. In the case of the Australian ETF EWA, we’re getting almost twice the yield of a U.S. large cap value fund for lower risk.
Copper has been called “The New Oil” by Goldman Sachs. This is one of the reasons that Peru is also one of our country value substitutions. Learn more about these countries by clicking on the blue-highlighted links.
 
Dollar Cost Averaging (vs. Buying High)
Berkshire Hathaway, like many stocks, is trading at an all-time high. If you still wish to own it as an individual stock (rather than just in a fund) even after all that I’ve said, then first personalize your own age-appropriate, diversified sample pie chart (using our free web app), and then dollar-cost average into the appropriate percentage of your large cap value slice. That way you are not just buying at an all-time high. You are also leaving room for the hots and other size/style choices. If you’d like to personalize your own sample pie chart, email [email protected] for a link to our free web apps.
 
What’s Your Rebalancing Plan?
When we invest in just one company, we’re tempted to use momentum, technical analysis or graphs as our gauge on buying and selling – all rearview mirror, rather than crystal ball, data. People often say, “I’ll just monitor the price.” However, doing that can inspire us to do the opposite of what we should be doing. As I’ve already mentioned (but it bears repeating), having just one company in our plan, even one that shadows the markets as Berkshire Hathaway does, is quite likely to jack our emotions in the wrong direction. When the price is high, we want to ride the gains and are enticed to buy more (as you are doing today). When the price drops, we might worry that Warren isn’t around to fix things, and we want to sell low.
 
Wall Street pros have a mantra: Stick to your knitting. This means: do what your system tells you to do and take the emotions out of it. (No Wall Street insider or economist would ever say, “Just invest all you’ve got in one company,” although a salesman might.)
 
Rebalancing 1-3 times a year is a way to capture gains and always have a diversified, age-appropriate plan. If our slices are too large, they are prompting us to sell high. When markets drop, slices become slivers and remind us to buy low. No one, not even pros, are able to market time the exact top or the exact bottom. Instead, we make sure that we have a plan that scores gains in bull markets and protects our wealth from bears. Rebalancing regularly with an age-appropriate, properly diversified plan does just that. Click to take our Rebalancing IQ Test.
 
Bottom Line
Buying at the most expensive price ever, hoping to sell higher down the road, praying for fair weather (no recession or correction), while riding a horse that is at the end of his life… Yes, I know that Berkshire Hathaway has many companies under its aegis with experienced, successful CEOs… Geico, Dairy Queen and all of Berkshire Hathaway’s automotive and oil/gas companies will likely stay in business for a while. Yes, I’m exaggerating and probably shouldn’t have used the horse in the metaphor. But it does help to see the illustration more vividly, and all of the other conditions in that set-up are spot on.
 
Warren Buffet’s achievements at Berkshire Hathaway are truly impressive. However, the company’s stock is not immune to recessions, and it hasn’t performed anything close to the Magnificent 7 – the companies that are responsible for more than half of the gains on Wall Street over the past 2 years. Most value stocks and funds pay a dividend, whereas Berkshire Hathaway does not. (If you’re looking for income, you’re not going to get it from this stock.)
 
Additionally, most individuals are not equipped with the time and experience necessary to own an individual stock in their personal wealth plan. Owning just one company isn’t a time-proven 21st Century strategy, while our pie charts with 1-3 times a year rebalancing is. This system is less time and money than most people spend – particularly in troubled times when FUD* sets in. When an “easy” plan has so many ways that it can go wrong, it's really not as effortless or painless as we are hoping it will be.
*Fear. Uncertainty. Doubt.


Join us at our online Spring Financial Freedom Retreat April 25-27, 2025 (online) and our Stock Masterclass (learn the strategies that earned me the ranking of #1 stock picker) on May 3, 2025. If you'd like a life-changing adventure of a lifetime, be our guest at a royal manor house in Cornwall, England, March 12-19, 2027. (With just nine rooms available, this exclusive, private, bucket-list adventure sells out a year in advance!) Call 310-430-2397 or email [email protected] to learn more. 

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* Invest in hot industries, such as Nvidia, artificial intelligence, and quantum computing,
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* Avoid capital gains and financial predators,
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* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Join us for our Online Spring Financial Freedom Retreat April 25-27, 2025. Email [email protected] or call 310-430-2397 to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details.

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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.