Monday, November 16, 2009

The Problem with Buffet

Bershire Hathaway (BRK.A; BRK.B) just let the cat out of the bag with filings dating back to June. Given the amount of media attention I do not blame the guy for using every trick in the book to hide his specific announcements. The issue becomes that of liquidity. They can buy and sell huge blocks of investments. The ability to sell is perhaps the most important. But what about when they buy 100% of say a railroad? There is no ability to sell. Would you buy an investment that was previously owned by Berkshire Hathaway. Isn't that the signal that the investment has nothing left to offer? The trick is to trend with them not against them.