Investing is often likened to planting a tree—the earlier you start, the more time your investment has to grow. If you had invested $1,000 in Berkshire Hathaway’s Class B shares (BRK.B) a decade ago, you might be curious about how that investment has fared over the years. Let’s delve into the details.
Understanding Berkshire Hathaway’s class B shares
Famed investor Warren Buffett’s Berkshire Hathaway issues shares of two classes: Class A (BRK.A) and Class B (BRK.B). Class B shares, due to their fairly priced lower class of shares relative to Class A, are more accessible to the individual investor, leading many prospective investors into the conglomerate to opt for Class B shares.
Berkshire Hathaway’s stock performance over the past decade
In order to determine the performance of a $1,000 investment, you must review the performance of the stock for the last decade. In March of 2015, shares of BRK.B were trading around $145.76.
Fast forward to March 2025, and the shares have fresh all-time highs, closing on March 12, 2025, at $498.42.
Calculating the growth of a $1,000 investment
Let’s break down the numbers:
- Initial Investment (March 2015): $1,000
- BRK.B Share Price in March 2015: Approximately $145.76
- Number of Shares Purchased: $1,000 ÷ $145.76 ≈ 6.86 shares
- BRK.B Share Price in March 2025: $498.42
- Value of Investment in March 2025: 6.86 shares × $498.42 ≈ $3,419.09
This calculation indicates that a $1,000 investment in BRK.B shares in 2015 would be worth approximately $3,419.09 in 2025, representing a gain of about 242%.
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Comparing Berkshire Hathaway’s performance to the S&P 500
It’s beneficial to compare this return to a benchmark index like the S&P 500 to gauge relative performance. Over the same period, the S&P 500 has experienced significant growth, but Berkshire Hathaway’s performance has been notably robust, reflecting the company’s strong fundamentals and strategic investments.
Factors contributing to Berkshire Hathaway’s growth
Several factors have contributed to Berkshire Hathaway’s impressive performance over the past decade:
- Diverse Portfolio: The conglomerate owns a wide array of businesses across various sectors, including insurance, utilities, manufacturing, and retail, providing a stable revenue stream.
- Strategic Investments: Under Buffett’s leadership, Berkshire has made strategic investments in companies like Apple, enhancing its overall portfolio value.
- Financial Discipline: The company’s prudent financial management and conservative approach to debt have positioned it well for sustained growth.
Considering dividends and total returns
It’s important to note that Berkshire Hathaway does not pay dividends, opting instead to reinvest earnings into the company. Therefore, the total return for investors comes solely from capital appreciation. This strategy has historically benefited long-term shareholders, as evidenced by the substantial increase in share value over the years.
The impact of market conditions on investment growth
Market conditions play a crucial role in the performance of any investment. Over the past decade, the stock market has experienced both bull and bear markets, influenced by factors such as economic cycles, geopolitical events, and technological advancements. Berkshire Hathaway’s resilience and adaptability have enabled it to navigate these fluctuations effectively, contributing to its steady growth.
Lessons learned from a long-term investment in Berkshire Hathaway
Berkshire Hathaway investment since the last ten years has various valuable lessons you can learn, which include:
- Long-term perspective: Holding investments for extended periods can lead to substantial growth despite short-term market volatility.
- Diversification: Investing in companies with diversified portfolios can introduce stability and reduce risk.
- Reinvestment strategy: Companies that reinvest earnings into growth opportunities can provide higher capital appreciation over the long term.
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