The stock market continued to move higher on Friday, so both the Dow Jones Industrial Average (DJINDICES: ^ DJI) and the S&P 500 (SNPINDEX: ^ GSPC) to reach new records. The Nasdaq Compound (NASDAQINDEX: ^ IXIC) is approaching its own high-water mark, as optimism about technological stocks has played a key role in today’s progress.
|
Index |
Percentage change |
Point change |
|---|---|---|
|
Dow |
+ 0.89% |
+297 |
|
S&P 500 |
+ 0.77% |
+32 |
|
Nasdaq Compound |
+ 0.51% |
+71 |
Data source: Yahoo! Finance.
Warren Buffett remains one of the most talked about investors in the world, and today his Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) celebrated a milestone. Buffett would be the first to tell you that it was completely meaningless from an investment point of view, but it is nonetheless the latest achievement in a glorious career for the Omaha native.
Turn the Berkshire odometer over again
Berkshire Hathaway finished 1% higher on the day. Its Class A stock, which is the highest-priced stock market, closed at $ 400,000 – the first time it has completed a trading session at or above the level.
Berkshire Hathaway CEO Warren Buffett. Image Source: The Motley Fool.
Berkshire has risen above the $ 400,000 mark several times on an intraday basis over the past month. But traders pushed it back lower each time towards the end of the day.
Although Berkshire’s A-Class has the highest price per share, Berkshire is not the most valuable company. The inequality stems from the fact that Berkshire has only about 640,000 A shares outstanding. The company has a much larger number of Class B shares – about 1.34 billion at the last count – each representing only 1/1 500th of the economic interest of their Class A counterparts.
An incredible ride
It’s hard to believe, but there was a time when Berkshire’s Class A shares traded at normal prices. Buffett first decided to acquire a controlling stake in Berkshire in 1964 when the company offered him $ 11.38 per share instead of $ 11.50. It took 13 years for the stock to reach $ 100, and bullish conditions in the 1980s raised the share price to $ 1,000 by 1983 and $ 10,000 in 1992.
The technological boom of the 1990s expressed concern that Buffett had lost his way, lagged behind and remained uninvolved in a major driver of stock market growth. These views changed during the technological eruption in the early 2000s, but it took Berkshire until 2006 before Class A shares first reached the $ 100,000 mark. The first step above $ 200,000 took place in 2014, and the $ 300,000 milestone fell in late 2017.
Why other stocks do not look like Berkshire
However, investors should not get the idea, just because Berkshire has the highest share price of all, that other stocks have not performed equally impressively. Most companies with a long history of successful growth have made corporate adjustments in their share prices to be friendlier to shareholders.
Shares divide the number of outstanding shares, making each value proportionally less. Dividend payments provide value to shareholders, and those who reinvest those dividends to acquire additional shares also benefit from the composition that results.
Buffett turned 90 last year, and it will be difficult for anyone to match his performance over his long career. Berkshire is a reminder of how powerful the stock market is as a wealth-generating machine, and the insurance conglomerate is not yet finished in its quest to deliver value to shareholders.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! Questioning an investment thesis – even one of our own – helps us all to think critically about investments and to make decisions that help us become smarter, happier and richer.