{ 2009 11 04 }

Build A Portfolio Around Berkshire Hathaway Class-B Shares (BRK-B)

By Kevin
Economy, Investing

BRK-B Split

Berkshire announced recently a 50-1 split of their class B shares which may make it easier for small time investors to pick up shares of BRK (think $68/share vs $3400/share).  As such, I’ve decided to document a strategy that could involve building a portfolio with these shares as a big part of the portfolio.

BRK-B As A Play On The U.S. Economy

Berkshire is a holding company with many businesses ranging from flooring to insurance to railroads.  It’s a pretty diversified way to play the U.S. economy.  Plus, you basically get the opportunity to have Buffett manage your money.  Therefore, as the part of the portfolio with exposure to the U.S. economy, you could consider dumping your money into BRK-B shares.

Other Allocations

If you put say a third of your portfolio into BRK-B, I would recommend putting a third into gold and other inflation hedges (perhaps other commodities plays).  The last third, I would probably put towards international exposure, specifically Asia.

So here is your portfolio design:

  • 33% into BRK-B shares – broad U.S. economy exposure plus hopefully you get some out-performance from the Warren Buffett factor
  • 33% into inflation protection – GLD, GDX, DBC, TIPS, maybe USO
  • 33% into international ETFs – EWC, FXI, AIA, etc.

This is a very simple portfolio design, but in some cases, simple is good, especially for new 20-something investors.  This is just one idea.  Hopefully, it may help you develop a structure for you to pursue as you invest money each month (or year or whatever).

Any thoughts?

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