Generally speaking, stock investing is not limited to the rich. We’ve highlighted before that one can start investing with only a few thousand pesos. In the Philippines, there really is no minimum needed since trades are dependent on the “board lot” — and with only a few thousand pesos, one can start joining the Philippine stock market already.
But there are stocks that are so expensive that very few people are able to buy it. Take for example, the most expensive stock in the world — that of Berkshire Hathaway traded in the New York Stock Exchange (NYSE) which, for the first time yesterday, has breached the $200,000 stock price level.
Yup, each share costs $200,000 — roughly translating to P8.7 million. We’re talking about one share only, that is, if you want to buy just one share of stock of Berkshire Hathaway (BRK-A), you must pay P8.7 million.
Want to buy 10 shares? Prepare $2 million or P87 million. Wow.
What is Berkshire Hathaway?
Berkshire Hathaway is a conglomerate holding company in the United States primarily owned and managed by Warren Buffet, a popular believer of the “value investing” theory and one of the world’s richest people. (See lists of Richest People here)
As a holding company, Berkshire Hathaway invests, acquires or manages companies and receives a share in the company’s profits depending on its equity stake in that company.
Berkshire currently owns the following companies (100%-owned):
- GEICO (auto insurance company)
- BNSF Railway (2nd largest freight railroad in the US)
- Lubrizol (chemical and special additives company)
- Fruit of the Loom (clothing manufacturer)
- Dairy Queen (soft-serve yogurt and ice cream)
- Helzberg Diamonds (jewelry retailer)
- FlightSafety International (provider of professional aviation training and simulation equipment)
- NetJets (sale and rental of private business jets)
The company also has significant holdings in Heinz, Mars, American Express, The Coca-Cola Company, Wells Fargo, and IBM.
Berkshire started as a textile manufacturing company in 1839 and in 1964, Buffett acquired majority stake in the company and started turning it into a holding company.
$200,000 per share
Berkshire Hathaway (BRK-A) has long since held the record of the world’s most expensive, but yesterday, it gained another record when the stock breached $200,000 for the first time.
It closed at $202,850.00 per share.
Again, this is the price of just 1 share — way more expensive than the average household income in the United States per year (around $80,000) and almost costing the price of a house in the US (median US home prices is at $233,000).
In contrast, the second most expensive stock in the US costs “only” $2,902 per share — that of Seaboard Corp. (SEB) — just a fraction, 1.4% to be exact, of the price of Berkshire Hathaway.
In the Philippine Stock Exchange, the most expensive stock is PLDT (TEL) which each share trading at P3,200.00 or $73 apiece. (See also: Most Expensive Stocks in the PSE)
Value Investing
Warren Buffett is a firm believer of “value investing” — the strategy of buying stocks or companies that appear underpriced through some form of fundamental analysis.
He rarely trades or flips stocks and instead invests in the company for the long-term. Warren Buffett’s views on value investing can be summarized by some of his well-known quotes below:
[box type=”tick”]On Holding Period[/box]
“Our favorite holding period is forever.”
– (Letter to Berkshire Hathaway shareholders, 1988)
[box type=”tick”]Buying Underpriced Stocks[/box]
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
– (Chairman’s Letter to Berkshire Hathaway shareholders, 2008)
[box type=”tick”]Investor vs. Speculator[/box]
“If you’re an investor, you’re looking on what the asset is going to do. If you’re a speculator, you’re commonly focusing on what the price of the object is going to do, and that’s not our game.”
– (Berkshire Hathaway Annual Meeting, 1997)
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