What's up with Berkshire...

I exited Berkshire Hathaway about a month ago because I was growing impatient and liked to see more movement. Ironically, I'm now trending towards more medium-termed plays, but I'm looking out for short-term/day-trades that will work, too.

Berkshire slammed down into the $4,035 range last Thursday, a support that it had broached the Friday before that before rebounding about $90. It's a pretty clearly established support; it hasn't dipped (more than 1%) below $3,900 since it first passed that point August 20th, 2007.

Clearly, a lot of people are recognizing it as a good time to average in for the long haul. BRK/B hit $5,059 in early December but started to slide real fast from that resistance point. It's probably closer to it's market-based "intrinsic value" at the near $4,400 mark, but I think it could easily continue on upward and break $4,600 next week. I'm not putting my money where my mouth is, but let's just watch what happens over the next week or two.

Things have been very busy at work, but I'll be getting back into this more and more over the next couple of weeks, as I'm consolidating my Scottrade and Thinkorswim portfolios. (I work at Phoenix, Arizona Web Development firm Synapse Studios as my day job. See my blog there.)

Sold BRK, Bought TSRA

Symbol	Action	Qty	Acct Type	Price	Total
TSRA	BOUGHT	53	CASH	$21.45	$1,143.85
BRK/B	SOLD	1	CASH	$4,466.00	$4,458.97
TSRA	BOUGHT	47	CASH	$21.46	$1,015.62

I originally bought BRK/B 1 @ $4,374.50 (incl. comm.), so selling at $4,458.97 yielded me $84.47. Which is nice, considering the "fun" I'm experiencing with TSRA. I'm in for a penny and a pound at $2,159.57. Hopefully, the patents don't destroy me. But I'm still wanting to stick around and hoping for a good outcome there. I won't buy in any more than that.

TSRA dipped on news of the patent stuff which stung my position, but that's what happens.

Overall? For now? Up $158.87. Visa needs to bounce one way or another and hopefully not erase my BSC gains.

Dropping Berk for now, but to trail or to stop...

I'm having a bit of an internal struggle with my few dollars here. I can sell Berkshire at market on Monday, and it'll likely open at $4,452 where it closed Friday. Or I can leave my trailing stop in place at 1% and have it fire at $4,407. Basically, it could cost me $45 to stay in, on the hope that it bumps up even further—not terribly likely. I'm expecting it to bounce a little bit lower, or a lot lower. It took on a nice boost on Friday. It'll level out.

So should I just exit now? Or let the TS stand?

Well, I've converted the TS from a 1% to a 31 point stop. This'll let me have a bit more granularity over the TS (on a stock as large as BRK, not being able to subdivide percentage points is a bitch) and let me realize any additional gains that may hit Monday morning.

I'm starting really wish I lived on the east coast. Waking up at 6:20am to catch market open is killing me. If you know me personally, you know that I'm rarely up before 10am, and rarely in bed before 3am, so it's rough.

Once again, just to reiterate: If I were in the market for a long-term investment strategy, I would seriously dump whatever excess cash I have into Berkshire. I just would rather keep liquid on the many other opportunities (and risk) I can play into elsewhere. And being a more active trader definitely makes this blog more interesting.

I still see BRK hitting $5,000+ in the next 6 months and $5,500 in the next year. There's no reason it needs to stop—Warren keeps building its value with solid, well-underpinned, stable growth not attached to anything as volatile as fuel and housing costs. And he always buys on the dip.

Exits Completed: Red Hat

Sold Red Hat, completing my roundtrip with about my commission lost. Stupidly, I had made two initial purchase orders, tacking on another $7 unnecessarily.

It didn't move much more than its initial spike so I think I sold at a loss of $19 or some such.

Berkshire made a big move, my trailing stop is still in effect and that should lock in a tiny profit.

Looking for some new things to play with. We'll see what happens with Berkshire on Monday.

Exits all around... (RHT, BRK/B, V)

Red Hat, Inc. (RHT)
As I feared, Red Hat is a bit too low in volume to really push past a 5% gain. I bought pretty much at market open, and pretty much at its peak thus far of $18.58 and worse still, after it had made its biggest move in after hours yesterday. It's showing strong resistance at $18.80-ish, and I don't think we'll see it move past that. Trailing stop set: 57 @ 1% / $18.4734.

Berkshire Hathaway (BRK/B)
Berkshire is having it's daily spike up, as high as $4,450 when I started writing this. It's at $4,432, with me having bought in at $4,374.50. Trailing stop set: 1 @ 1% / $4,393.55, guaranteed profit of all of $20. (After commission.) Hopefully we can squeeze out just a little more, but I want some big liquidity back. I'll probably keep my eye on it and watch for it to fall to $4,200 to buy in again. It's moving up almost no matter what; buying on the dip of the range is a good call.

Visa (V)
This stock just won't settle down. Everyone expects it to perform exactly like Mastercard—to take off and break out in the next couple of months and skyrocket into the $200s. It took MA four months to move and MA had a lackluster first few months at best, opening at $44 like V, and only hitting the $50s until month 4, when it broke out in a big way:


In the meantime, nothing's moving on it and today, it's taking a bit of a hit, trending downwards and unable to gain any ground on its rallies. We'll see where it lands. Trailing stop set: 35 @ 5% / $60.268

Nothing much.

Some nice gains today. No trailing stops triggered. I'm bumping up my V trailing stop I think. (I actually converted it to a straight stop.)

It's still finding its place in the world, so to speak, and that place is probably under $70. Needed more liquidity to play that right but alas.

I'm keeping this one short—huge presentation in just a few hours. Wishing Berkshire would bounce back and still considering canning it for now and playing around with a bit more liquidity in the short term.

Thoughts? Worth the maybe-it'll-hit-$5,500 (gain of about $1700) within a year to hold onto it? Or can I make more with a bunch of smaller, high-octane, higher risk plays?

Am I too young, so to speak, for Berkshire?

Preparing my exits...

Symbol	Last price	Change	Shares	Cost basis	Mkt value	Gain	Gain %	Day's gain
AAPL	140.98	1.45	1	123.35	140.98	17.63	14.29	1.45
GOOG	450.78	-9.78	1	428.94	450.78	21.84	5.09	-9.78
BRK.B	4300	-41	1	4367.5	4300	-67.5	-1.55	-41
V	63.1	3.37	35	2273.95	2208.5	-65.45	-2.88	117.95
				$7,193.74	$7,100.26	($93.48)	-1.30%	$68.62

Someday, I'll figure out how to accurately represent my performance in the market. The above Google Finance output, for instance, doesn't much care about my BSC deal which netted me $280, instead highlighting that I've lost on V and BRK.B.

Visa had a decent day today and didn't hit my STOP for it. I've established 3% trailing stops for both GOOG and AAPL, which will put me at an extremely meager profit for each of them; it's stupid to be playing with that cost with such low volume. The commissions make it completely inefficient. Lesson learned.

I'm also considering pulling out of BRK.B. It's not underperforming or anything; I expect in a year or less it'll be breaking $5,000 or more. It's just boring and I think tying up that much capital is a bit of a pain when I have such little to work with. It's a decent hedge though, and keeps me from blowing everything at once. But if I play smart and keep my eggs in separate enough baskets at all times, I'll be fine. I may exit once it pushes past my commission-break even. Meh.

BRK Bounceback...

AAPL	133.27	+3.60	(2.78%)
GOOG	433.55	+1.55	(0.36%)
BRK.B	4,347.88	+82.63	(1.94%)
Value:	4,914.70	87.78	(1.79%)

Berkshire was bouncing around a bunch today. Of course, looking at it every day is purely an academic exercise since I'm not touching it. Could've averaged in over the past two days when it was in the $4,200 range, but that only works for long-term positions and I'm not looking to tie up another $4k.

*Someone* thought well to buy in on a bit of a low point for [BRK], pushing it up $82 in a series of big buys towards the end of the day in rapid fire.

My buy of [V] (which isn't showing up above because I paste that from Google Finance who isn't yet allowing you to add [V] as a portfolio symbol yet) of 35 @ 64.97 smarted just a touch by close @ 64.24; it hit its resistance right about there but damn if I didn't think it'd push past the 15% gains mark.

What happens to Berkshire Hathaway when Warren Buffet dies?

The Oracle of Omaha is 77 years old and though he's "never felt better," a lot of people wonder what will happen to Berkshire Hathaway both from a share value/price perspective and an ownership/succession perspective.

Berskhire is a fascinating holding company because of how closely it represents the genius of one man. Mr. Buffet has built the organization in a manner that intractably reflects what he deems to be in the best interest of himself and equally, his shareholders. He guides all the plays and is wholly involved in every decision—he's not running things from the sidelines; the success of BRK is his, near-completely.

When he dies, BRK will slip quite a bit; perhaps as much as 20%, knock on wood. That day will represent the best single day one could buy BRK because of one simple concept: intrinsic value. The pure, intrinsic value of Berkshire is the mark-to-market value of all of its holdings at any given point. Mr. Buffet or no, the company's holdings value is closer to the $5,500-$6,000/B-share mark. BRK stays out of high risk, high-liability holdings by its nature and has a lot of flexibility/cushion from its wonderful insurance float. Because of this, it has high earnings, low debt and immense stability even when facing recession (an opportunity to buy up undervalued, high-potential companies, says Buffet) or in the face of inflation.

That said, there is some very clear, high value add from Mr. Buffet's leadership. While there are others intimately acquainted with his strategies and approaches and ethics towards running the company, he has professed an exception quality of wisdom and patience with a flair towards risk aversion and greed aversion in just the right quantities. While he maintains a list of his own hand-picked successors should the need arise, we can only hope that they'd be wise enough to continue using his formula and stay the course.

Which is to say, beyond an initial massive shock in the market and BRK at large, (if that; most BRK holders know Warren's approach and succession plans and would likely not be too phased at first) the stock will recover swiftly because of how undervalued it will quickly become. What happens past that will be in large part a function of who is named successor and the confidence level a passed on Buffet is able to instill in shareholders in them, in addition to how they perform straight away.

For now, I'd much prefer Mr. Buffet alive and well. As he says in his BRK owner's manual:

Lest we end on a morbid note, I also want to assure you that I have never felt better. I love running Berkshire, and if enjoying life promotes longevity, Methuselah’s record is in jeopardy.

Berkshire slips, little other movement and watching Southwest drop a few thousand feet...

Symbol	Price	Change ($)
BRK/B	$4,357.00		-43.00
GOOG	$440.18		0.35
AAPL	$126.03		-1.32

Not much movement on anything but Berkshire today, which slid 43 points. Google was up to +5% earlier in the day but came back down to finish up just 35 cents. (Of course, Berkshire and Apple actually moved about the same amount, percentage-wise: -1%.)

Another stock on my watch list had a tumultuous day to be sure: Southwest Airlines (LUV) dropped 7.34%, or 0.91 to 11.49 on news that they were grounding as many as 43 planes for "safety reasons". This represents a bit of an issue for them, as the FCC revealed just last week some inconsistencies with their safety practices that they had up until now staunchly denied. In addition to grounding the planes, they fired or put on leave 3 individuals within the company partially responsible for maintenance and safety practices.

Southwest is one of the nation's safest carriers. They've never had an in-flight crash or fatality (though they've slid off the runway twice, with on-ground fatalities in at least one of those occasions; both were pilot error in inclement weather if memory serves) which is saying something, considering they carry the most domestic passengers.

That said, no one wants to hear that your favorite airline is cutting what everyone agrees are pretty damn critical corners. Cracks in the fuselage can't be ignored; stress fractures can cause planes to rupture and has in the past, though for different airlines. Ironically, on my last trip to Vegas, our plane was pulled for safety reasons just as we were about to board. Something about it being "not airworthy." I'd much rather they make that call *before* I get on the plane, than learn the hard way.

I'm anticipating we'll see a bit more of a slide for Southwest as the full details of the issue at hand emerge. Grounding 43 planes is a ridiculously expensive exercise as well and may have an impact on earnings for the quarter, no matter the length of the grounding.

Southwest has been one of the best performing stocks consistently for the last 30 years, right up there with Wal-Mart. They're on my watch list because they're typically very smart about how they run their business. Even when all the other airlines were busy declaring bankruptcy, Southwest was making a profit consistently. (In fact, they've reported profits for every quarter in the past 30 years, missing once I believe in 2002.) They leverage their purchasing power to buy fuel futures to help absorb rising fuel costs—a move they've played far better than their rivals, and it's shown. The hedging and cost structure changes aren't quite as powerful lately and haven't translated to good times for their share value, but it'll still help them long term.

I'll be looking to pick up some Southwest once the dust settles from this and barring any of their planes dropping from the sky. If anything, I anticipate will help undervalue the stock enough to make it worthwhile to get in cheap. It's been lackluster for the past two years and might be primed for an uptick if they can avoid getting wrung out too harshly from the groundings.