Oracle of Omaha

The worlds of SacTownGuy sometimes collide. After cranking out 60 minutes on the recumbent bike, reading some murder mystery, I moved to the back row for 20 minutes of Barron's. SacTownGuy doesn't own a lot of stocks but finds the topic interesting. I turned my IPod on and as I listened to the RBL Posse telling me how you don't want to smoke that Bammer Weed followed by Ice Cube telling me about "Ghetto Bird's" (police helicopters) I read an article in Barron's about the Oracle of Omaha, Warren Buffett, and their headline store that Berkshire Hathaway is over-valued. WHAT? The stock market LEGEND, GURU, KNOW-IT-ALL... over-valued?

I thought back to a client meeting recently where they told me they got a letter from their stock broker that their account was not diversified as they had to large a percentage of one stock... BrKa (Berkshire Hathaway A shares - the good ones). As she commented to me, "that's crazy since it's so diversified it's like a giant mutual fund...." Right she is, Berkshire owns lots of insurance companies, or pieces of them, like Geico and American Re. However, it also owns companies, or pieces of them, like See's Candy and some Israeli metal fabricator. Mr. B is as well diversified as Mr. D was on Different Strokes!

I thus continued reading but not really buying the story. At one point the author suggested Brka was 10% over-valued according to one expert and another expert had it listed as "neutral." Ten percent? Neutral? BIG DEAL! Tell me it's 40% over-valued and experts are lining up to sell all they can and maybe I would be buy into the story.

I don't remember the exact numbers but the price has increased from about $80,000 to it's current position of about $140,000. Yes, that's for ONE share. Big price jump in just a year or two. I like selling when stocks are at toward their 52 week high and I like buying when they are near their 52 week low.

The story goes on to remind us that Mr. B is in his 70's. I don't remember exactly but old enough he could kick it at any moment... or leave 25 years. You just never know. I had heard he had his replacements already lined up so as to avoid a huge drop in value if he should die unexpectedly. He plans to put in place a CEO and a president of investments. One of these replacements is 70 years old himself. Though age brings wisdom maybe he should look for someone a tad younger... 60? Go crazy, and find a 50 year old!?

Bottom line, I say sell a little. Maybe keep some Brka if you have it but sell some too. Particularly if you own this in your tax deferred vehicle and would avoid cap gains tax. SELL, SELL, SELL... and don't smoke that Bammer Weed (whatever the hell that is).

Peace out

P.S. I have absolutely no licenses or certifications to show that I know crap about stocks. Thus take my opinion for what it is... a flippin' opinion. Buy? Sell? Trade? Whatever you want is fine... I am just blabbing.