Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Invest With Warren Buffett

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks following a meeting in Omaha, Neb., on May 5, 2019. Buffett has seen the value of his company grow by an annual average rate of 20%.  (Associated Press)

Warren Buffett has seen the value of his company, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), grow by an annual average rate of 20% over the 55 years from 1965 to 2020 versus about 10% for the S&P 500 during the same period.

It’s growing more slowly these days, but still likely to be a reliable long-term grower.

Berkshire is a massive conglomerate, with around 360,000 employees and a recent market value topping $630 billion putting it among the top 10 companies globally and well ahead of “small” businesses such as Visa and Walmart.

Much of its business is centered around insurance, rail transportation and energy, but it also owns lots of other kinds of companies, such as See’s Candies, Benjamin Moore, Pampered Chef, Fruit of the Loom, Brooks, Duracell and International Dairy Queen.

Berkshire Hathaway also has plenty of stock in other companies. For example, it recently owned around 19% of American Express, 12% of Bank of America, 9% of Coca-Cola and perhaps most important 5% of Apple.

With Buffett turning 91 in August, he has lined up talented leaders to fill his shoes, and they will continue doing what Berkshire does so well; collecting income from its subsidiaries and redeploying some to its businesses that need it, while spending some to buy more companies or shares of stock.

Its future looks bright. (The Motley Fool owns shares of and has recommended Berkshire Hathaway.)

Ask the Fool

Q: What’s the “Long-Term Stock Exchange”? – P.W., Norwich, Connecticut

A: Launched last year, the Long-Term Stock Exchange (LTSE) aims to differentiate itself from more mainstream exchanges such as the New York Stock Exchange and the Nasdaq by its focus on long-term performance.

Companies on traditional exchanges are often very focused on delivering good results every quarter to please investors and Wall Street, but that can hurt their ability to execute successful long-term strategies.

Companies on the LTSE will still have to issue quarterly reports, but they will also have investors who seek terrific long-term results.

The LTSE also promotes transparency and commitments to “ESG” policies and practices that support the environment, social responsibility and good governance.

It notes, “Companies that list with us seek to increase impact with employees, customers, like-minded investors and society at large.”

The exchange hopes to connect companies and investors with similar values.

My smartest investment

My smartest investment was buying shares of Etsy at around $14 per share. I’m still holding, with shares at $68. – S.S., online

The Fool responds: You wrote about this smart investment two years ago, and we hope you’re still hanging on to those shares of the online marketplace for vintage and hand-crafted goods because they were recently trading around $209 per share!

This is a great example of how you can build wealth with some terrific companies as long as you hold on to your shares for years (or decades).

That’s easier said than done, because the stocks of great companies won’t rise relentlessly without occasional pullbacks.

In March 2020, for example, Etsy shares plunged over 33% as the pandemic started to take hold.

And between April and May of 2021, shares dropped further, in part because management tempered expectations about near-term growth.

That’s reasonable, because few companies can grow at breakneck speed continually, and our recovering economy has more people shopping in brick-and-mortar stores, which can hurt online retailers.

Big declines reflect investors losing confidence and selling which, ironically, creates great buying opportunities for those who do believe in the company.Today, with a market value recently over $26 billion, Etsy is viewed by many as a promising long-term investment. (The Motley Fool owns shares of and has recommended Etsy.)