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As an individual looking to make long term investments, I'd still much rather own stock in Berkshire Hathaway because its holdings are much more diverse than ju

As an individual looking to make long term investments, I'd still much rather own stock in Berkshire Hathaway because its holdings are much more diverse than just Facebook stock. FB is not as safe a long term bet for the average person.

21 8y ago
Not sure what your point is. The average person should just own a stock index fund. In fact, this is the exact advice that Buffett gives.
- anaphor 8y ago
  My point is that billionaires like Mark Zuckerberg whose wealth is concentrated in equity for a single company are different from people like Buffett, who actually spent most of their life working on managing different investments in order to create stable growth of their portfolio. So we're comparing someone who is 87 years old and has steadily increased their wealth over time, to someone who basically got rich very quickly, and whose wealth is open to extreme fluctuations. I'd much rather be the first person.
  - petercooper 8y ago
    Interesting. I'd much rather be a 34 year old with extremely risky/fluctuating wealth than an 87 year old with even a trillion in the bank.
    - 21 8y ago
      FTFY: I'd much rather be 34 than 87
  - 21 8y ago
    Nothing stops Zuck from selling some/all of his shares and buying BRK.A, SPY or treasuries. Sure, if he wants to do it quickly he will need to do it at a discount, but I'm pretty sure it's under 10% if he is willing to spread it over a year or so. You can argue that he is so rich exactly because he didn't diversify. Obligatory Warren Buffett quote: "Keep all your eggs in one basket, but watch that basket closely"
  - moate 8y ago
    Why? Zuck is 34 years old and a billionaire. Buffet didn't become a billionaire until his 60s. A point can be made for being obscenely wealthy for the extra 30 years allows you to appreciate the fruit of your labor while still in the prime of your life. If this is a "virtue of work" thing where Buffett is somehow "better" because he "earned" his money I don't buy it. Being the son of a wealthy politician and using that influence and money to procure MORE wealth and influence isn't somehow more noble than creating one of the most powerful companies in the world. But I mean, if you're more into the whole "old money" crowd, that's your choice I guess.
    - anaphor 8y ago
      Nope, it's simply about less risk. Of course we know now that Zuckerberg is wealthy, but Facebook could easily go under or lose a lot of value. If the entire market were to crash, then either it will stay that way (in which case everyone is poor), or (as history shows), it will bounce back up in a few years or so.
      - moate 8y ago
        I don't think you understand what being a billionaire is. Zuckerburg has hundreds of millions of dollars in real estate holdings in Hawaii alone. His seat at the top of this list is contingent on Facebook continuing to make him money, but he is wealthy independently of it at this point I get that humans are, by design, way too risk averse, but what do you define "could easily go under" as meaning? What odds would you actually give of these outcomes: Facebook keeps stays a top 10 business for the next 20 years, Facebook stays a top 10 business for the next 5 years, Facebook implodes and is worthless in the next 5 years. I get your point, which I think is extremely narrow, is that "a diverse portfolio is better than a single stack investment plan", but to say you'd prefer to be one billionaire vs being another different billionaire because the first billionaire meets some weird criteria you've devised for determining how best to become a billionaire is not an objective point to be made. TL-dr; you're not playing the same game either of these guys are, and your suggestion that trying to model your life after one vs the other is a weak point to make because of it.
sebleon 8y ago
Right, less downside risk, but Berkshire Hathaway in particular hasn’t even kept up with the S&P500 for the past decade. Better off with an index fund for sure.
- anaphor 8y ago
  That's my recommendation as well. If you want to manage your own finances there are plenty of services that let you buy ETFs with no commission fees too. I'm definitely not telling people to go out and dump all their money into BH stock
- eaenki 8y ago
  That's what happens when one gets too old. One can't pretend to live in the future at 70 and therefore can't anticipate trends - reason why BH hasn't kept up with the S&P500.
- siftikhar 8y ago
  Ignoring 2007 and 2008 (when investors like warren buffet hugely outperform) makes this less meaningful.
- tamcap 8y ago
  Quickly comparing Brk.b to vti over the span of the past 5 years (so no graph hacking) they gained 60.14% and 64.71%, respectively, dividends not included. That's a much smaller difference than your statement seems to imply.

21 8y ago

Not sure what your point is. The average person should just own a stock index fund. In fact, this is the exact advice that Buffett gives.

anaphor 8y ago
My point is that billionaires like Mark Zuckerberg whose wealth is concentrated in equity for a single company are different from people like Buffett, who actually spent most of their life working on managing different investments in order to create stable growth of their portfolio. So we're comparing someone who is 87 years old and has steadily increased their wealth over time, to someone who basically got rich very quickly, and whose wealth is open to extreme fluctuations. I'd much rather be the first person.
- petercooper 8y ago
  Interesting. I'd much rather be a 34 year old with extremely risky/fluctuating wealth than an 87 year old with even a trillion in the bank.
  - 21 8y ago
    FTFY: I'd much rather be 34 than 87
- 21 8y ago
  Nothing stops Zuck from selling some/all of his shares and buying BRK.A, SPY or treasuries. Sure, if he wants to do it quickly he will need to do it at a discount, but I'm pretty sure it's under 10% if he is willing to spread it over a year or so. You can argue that he is so rich exactly because he didn't diversify. Obligatory Warren Buffett quote: "Keep all your eggs in one basket, but watch that basket closely"
- moate 8y ago
  Why? Zuck is 34 years old and a billionaire. Buffet didn't become a billionaire until his 60s. A point can be made for being obscenely wealthy for the extra 30 years allows you to appreciate the fruit of your labor while still in the prime of your life. If this is a "virtue of work" thing where Buffett is somehow "better" because he "earned" his money I don't buy it. Being the son of a wealthy politician and using that influence and money to procure MORE wealth and influence isn't somehow more noble than creating one of the most powerful companies in the world. But I mean, if you're more into the whole "old money" crowd, that's your choice I guess.
  - anaphor 8y ago
    Nope, it's simply about less risk. Of course we know now that Zuckerberg is wealthy, but Facebook could easily go under or lose a lot of value. If the entire market were to crash, then either it will stay that way (in which case everyone is poor), or (as history shows), it will bounce back up in a few years or so.
    - moate 8y ago
      I don't think you understand what being a billionaire is. Zuckerburg has hundreds of millions of dollars in real estate holdings in Hawaii alone. His seat at the top of this list is contingent on Facebook continuing to make him money, but he is wealthy independently of it at this point I get that humans are, by design, way too risk averse, but what do you define "could easily go under" as meaning? What odds would you actually give of these outcomes: Facebook keeps stays a top 10 business for the next 20 years, Facebook stays a top 10 business for the next 5 years, Facebook implodes and is worthless in the next 5 years. I get your point, which I think is extremely narrow, is that "a diverse portfolio is better than a single stack investment plan", but to say you'd prefer to be one billionaire vs being another different billionaire because the first billionaire meets some weird criteria you've devised for determining how best to become a billionaire is not an objective point to be made. TL-dr; you're not playing the same game either of these guys are, and your suggestion that trying to model your life after one vs the other is a weak point to make because of it.

sebleon 8y ago

Right, less downside risk, but Berkshire Hathaway in particular hasn’t even kept up with the S&P500 for the past decade. Better off with an index fund for sure.

anaphor 8y ago
That's my recommendation as well. If you want to manage your own finances there are plenty of services that let you buy ETFs with no commission fees too. I'm definitely not telling people to go out and dump all their money into BH stock
eaenki 8y ago
That's what happens when one gets too old. One can't pretend to live in the future at 70 and therefore can't anticipate trends - reason why BH hasn't kept up with the S&P500.
siftikhar 8y ago
Ignoring 2007 and 2008 (when investors like warren buffet hugely outperform) makes this less meaningful.
tamcap 8y ago
Quickly comparing Brk.b to vti over the span of the past 5 years (so no graph hacking) they gained 60.14% and 64.71%, respectively, dividends not included. That's a much smaller difference than your statement seems to imply.