If I had to bet all my savings on one stock, I would bet on this one!

Now that I have your attention, never ever do that! That’s some terrible advice!  Betting your savings on one company is never a wise investment strategy.  Diversification is the key.  Spread your risk.  Think Enron, AIG, GM.., in case you’ve been living under a rock, they all tanked!

But to make up an interesting read, let’s say I had to pick one and only one stock, I have one such stock in mind.  First, let’s look at the numbers.  Opinions are passe.

Market Cap	201.20B
Performance Till Date (till 2009)	434,057%
Years In Operation	46
Outperformed the S&P 500	38 times
Trailed the S&P 500	7 times

Anyone can make money in a bull market, what about the performance during bear markets? Glad you asked!

Performance During Bear Market Years (Annual Percentage Change)

	S&P 500 (%)	Mystery Company (%)
1966	-11.7	20.3
1973	-14.8	4.7
1974	-26.4	5.5
1977	-7.4	31.9
1981	-5.0	31.4
1990	-3.1	7.4
2000	-9.1	6.5
2001	-11.9	-6.2
2002	-22.1	10.0
2008	-37.0	-9.6

Performance When Trailing The S&P 500 (Annual Percentage Change)

	S&P 500 (%)	Mystery Company (%)
1967	30.9	11.0
1975	37.2	21.9
1980	32.3	19.3
1999	21.0	0.5
2003	28.7	21.0
2004	10.9	10.5
2009	26.5	19.8

Those are some impressive numbers. There aren’t too many companies that can boast such returns and if you are an informed investor, you probably know which company I’m talking about.

Berkshire Hathaway.

This company is run by the most modest man in the world – Warren Buffet. It is hard to find a more humble person who happens to be one of the richest in the world. He still lives in a house in Omaha, he purchased for $31,500.

What does Berkshire Hathaway do?
Berkshire Hathaway is more similar to an actively managed mutual fund company than a traditional one. Berkshire is a holding company of a variety of companies handpicked by Buffet and his partner Charles Munger. Yet, unlike mutual companies, Berkshire Hathaway buys up so much stock in a company that they have a say in all strategic decisions the company makes. Buffet can influence the direction a company takes which is not true with mutual fund managers.

What’s Wall Street’s opinion on Berkshire Hathaway? According to Bloomberg, bond investors consider Berkshire Hathaway notes safer than US government bonds! That’s like saying they have more faith in Berkshire Hathaway than the US government on a loan default!

So what’s the catch?

• For one, the top 2 people who run Berkshire Hathaway are aging. Buffet is 79, Munger is 86.
• Berkshire Hathaway is huge. It may not be able to give the same returns investors are used to
• If you like to bet on technology stocks, Berkshire Hathaway is a bad choice. Buffet is known for his aversion to tech stocks
• The current market can trip even the best of managers
• The price on 1 share of BRK.A is $121,987! And will most likely never split. (You still can get in on the gravy train by getting its sibling brk.b which trades at around $82)

If Buffet became the world’s third richest man working the market, he knows something that others don’t. I would pick Buffet over any other money manager considering Buffet’s performance record. So if I had to bet my savings on one stock, I would pick BRK.B (I can’t afford BRK.A, yet)

Related websites

• Will We Still Be Investing in 2110, and What Will Markets Look Like in 100 yrs?
• Is Cash Still King?
• Understanding Investment Returns for Retirement Planning