Here's a shocker (although not really to those paying attention), if you would have invested in Berkshire Hathaway Inc. (NYSE: BRK.B) three years ago instead of the wonder company Google, Inc. (NASDAQ: GOOG) you would be 30% ahead right now.'My pal Warren' never ceases to amaze and for all the excitement that Google has brought to the investment world, the stock market in particular, and the internet -- scaring the likes of Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corporation (NASDAQ: MSFT), it has not done all that much.
For those that took a ride on the Google band wagon at the beginning you are now poorer than you would have been taking a more traditional investing approach and you did it all the while taking more risk. More risk and less reward is a bad thing.
Check out the following three year chart for BRK.B and GOOG.
As you can see Berkshire did lose money, but Google lost 4 times more and this to me is made all the more curious by the fact that Berkshire has large stakes in the insurance and financial services business that were crushed this year -- Google does not.
So what happens going forward?
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B.
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Reader Comments (Page 1 of 1)
11-27-2008 @ 4:48AM
Joaquin Grech said...
I'm a big fan of Buffett but I didn't like this article.
You can't pick a random range of dates and say X is higher than Y therefore X is a better investment. For instance, Google went IPO at $85 a share, today is $290. So in that period, Google did beat Berkshire by a huge factor.
The author picks Google's starting point at $350 a share.
You could have picked a range from May08 to Nov08 and then Berkshire would have outperformed Google by a huge margin.
Or you could have picked any other random period in Google's history and Google would have outperformed Berkshire.
Which one is a better investment? The article didn't add any information to that question.
11-27-2008 @ 5:25AM
Joaquin Grech said...
This is ALL the way:
http://finance.yahoo.com/echarts?s=GOOG#chart3:symbol=goog;range=my;compare=brk-a;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
11-27-2008 @ 5:28AM
Joaquin Grech said...
Hit the 'max' button on the graph
12-04-2008 @ 9:38PM
SocraticInvestor said...
Are you an investor with a philosophy of "buying management"? If so, re: Google and Berkshire you will be averaging down in to each throughout this bear market - you can allocate more to these names if you really believe in an investment theme where it is possible to outperform in the long run by riding on the right management. Does not mean SPY might not outperform these two names over next year or even next 20 - all you can do as an investor is pick your philosophy and stick with it. I own both and have limit orders to buy more. Long cycle trading, not short cycle trading on these. http://www.socraticinvestor.com