Missed Out On Warren Buffett's BRK.A Stock? BRK.B Setting Up Nicely!

Embrace Compound Growth

I read today that Warren Buffett is now worth over $100 billion. You may not be aware of this but the Oracle from Omaha was worth only $300 million in comparison just after he turned 50. 

It is a given that a large percentage of the population will not even get to $300 million in their lifetime let alone $100 billion but what this highlights is the importance of playing the long game and the power of compound growth. 

Most everyday people simply want a generous nest egg to leave behind for their loved ones, somewhere in the high 6 figures to 7 figures region, a very achievable target if you stay true to the principles of good investing. What are these?

• Have a simple process that establishes high-probability assets. 
• Execute a robust strategy that cuts losers short and lets winners run. 
• Compound strategically to accelerate the profit phase. 
• Repeat between now and retirement. 

Early investors into Berkshire Hathaway Inc (NYSE: BRK-A) will be sitting pretty with the stock currently worth almost $430,000!

However, look at (NYSE: BRK-B), and you have a far more affordable stock and one that is setting up for a potential entry. Let's do some analysis.

The Monthly Timeframe

A stock that has a history of trending well. Price is trading above the high of last year (green line) giving it a bullish bias. Price has also moved over 20% this year. 

The Weekly Timeframe

Price is trading above both the 200sma and the 50sma giving price a bullish bias. I keep it simple on this timeframe. 

The Daily Timeframe 

Price is trading above the 200sma giving it a bullish bias. At the time of writing this article, price was also trading above the 50sma and the 20sma. However, I am currently paying little attention to this as price has been consolidating since the high of May 2021. During sideways markets, the 50sma and the 20sma regularly crossover with price swinging above and below these two key MAs. This can be seen on the daily timeframe below. However, once price breaks out from consolidation, then the MAs will align with the 20sma above the 50sma above the 200sma confirming a bull trend. This is when the MAs are of far more interest to me. For now, I just want to see price remain above the 200sma as this gives price a higher chance of breaking out to the upside and pushing beyond $300. 

Conclusion

As the expression goes, the longer the consolidation, the bigger the breakout. With price trading inside a consolidation since May, circa 6/7 months, a confirmed breakout from this sideways market as well as a break and close above $300 will be a significant step for these B shares to push towards $500 and beyond. 

I have been holding BRK.B since earlier this year. I have had to apply patience with price trading sideways for most of 2021 so far but the next breakout will be significant and when I will add further positions. 

In other words, trade less, hold more and COMPOUND. 

Zaheer Anwari - Co-founder of Sublime Trading

PS Earnings is out on Friday 5th November so will that be the catalyst to push price out of consolidation? Only time will tell...