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Why Berkshire Hathaway Stock Is An Excellent Long-Term Opportunity

  • Berkshire Hathaway led by Warren Buffett has outperformed the market for many years.
  • BRK.B stock is an excellent option for a diversified low-risk investment with a significant capital appreciation potential.
  • The company is continuing to operate in the same manner, and it has a good chance to continue to outperform the market.

Investors seeking diversified low-risk investment with a significant capital appreciation potential might consider Berkshire Hathaway Class-B (NYSE:BRK.B) stock (Berkshire Hathaway Inc (NYSE:BRK.A) stock at $215,824 is out of reach for most of us). The main reason to consider Berkshire's stock is the company's legendary chairman Warren Buffett, who has achieved tremendous success in the past. However, Has Mr. Buffett's past success been repeated in the last few years? Is it not better to invest in the S&P 500 index through an ETF (like SPDR S&P 500 Trust ETF (NYSEMKT:SPY)), after all, it is more diversified than Berkshire's portfolio? To answer this dilemma, I have made a comprehensive study comparing BRK.B stock performance to the S&P 500 index for seventeen different scenarios. I assumed starting investment in both every year since January 1, 2000, and holding the investment until now (July 11, 2016). I have compared the total return, the annualized return, and the maximum drawdown, for Berkshire stock and the S&P 500 index, including dividend for the S&P 500 (BRK.B is not paying a dividend), as shown in the table below.

As the table clearly shows, in every scenario except those when investment started on January 1 2009, and...