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The price at which the stock was purchased shouldn't really affect decisions about the portfolio, should it? As I understand it, from the perspective of a rati
by Cpoll 4y ago
The price at which the stock was purchased shouldn't really affect decisions about the portfolio, should it?
As I understand it, from the perspective of a rational investor, inheriting a stock and not selling it is the same as inheriting the equivalent amount of money and buying that stock.
- plonk 4y agoBut I guess it doesn’t mechanically increase the stock’s price? Unless the buyer is Warren Buffet and it makes the news?
- ladberg 4y agoIf the stock would have otherwise been sold off like the others, then it's not really different because the price is higher now than it would have been. E.g. Allegheny selling AAPL + Berkshire buying AAPL == Berkshire buying Allegheny (Assuming a perfect market, which isn't the case but I don't feel qualified to say what the other effects would be)
- ericmay 4y agoSelling the stock means capital gains tax. In addition to buying the business presumably for its own intrinsic reasons Berkshire may want to increase its position in Apple with a long term price target of say, idk, $500/share within 10 years (just making something up here) and getting the stock at $50/share versus $150 on the open market may have made sense to them.