Warren Buffett goes Indexing!

Front page Wall Street Journal again today – I just had to comment.

Warren Buffett’s elite stock has never been one that the average american could own.  He has never split his share price so the price of one share is so high (yesterday it traded for $114,950 – for ONE SHARE!) that the average investor leaves it alone.  Until now.

The S&P 500 has come a courting and because BH is now among the top 500 largest companies in the US – the average indexing american will own it.  The article says:

“This further exposes Berkshire stock to the strategems of fast-moving traders, a brand of investor anathema to Mr. Buffett’s general buy-and-hold approach.”

This confirms two things again:

1.  That the average mutual fund is trading at a high level – once a company becomes large enough it joins the ranks of the highly traded because large companies cost less to trade.

2.  Warren Buffett believes that you should own what you should own and let the market do the work.

Where do returns come from?  Trading activity or the market?

Warren and I firmly believe that returns come from the market – we should eliminate as much trading as possible from our portfolios.

Call me to find out how.

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