berkshire hathaway

[edtost]

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The S&P has much less unsystematic risk than any individual stock, even Berkshire. This is why it would be foolish to feel a portfolio consisting of only BRK would be a much better investment that that of the S&P 500.

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while true, this is not the biggest problem with his logic. the beta, vol, and return estimates he is basing his opinions on are historical, not expected, meaning that they will mostly fail to have predictive value. there is a level of expected return where BRK will be a better investment than the index based on their relative levels of vol (note that beta in this instance is unimportant for the comparison). the problem is, by only looking at historical return series, there is no real way to estimate the correct levels of vol and expected return to use when figuring this out.