For those that don't know, Berkshire Hathaway is the company owned by the legendary investor Warren Buffet. He invests in a bunch of stocks that he thinks can beat the market. As a normal investor, you have two option to get in on Buffet's success. The first is to invest in Berkshire Hathaway stock BRK.B. The second is to invest in all the stocks that Buffet has chosen. Some brokerages like M1 Finance provide a quasi ETF that replicate Buffet's portfolio. I'm wondering what's the difference between these.
- What does mean in layman terms to invest in BRK.B? The concept of investing in a company that, in turn, invests in other companies confuses me on what actually drives the price of BRK.B.
- Why is the graph shape of BRK.B and the Buffet quasi ETF look so similar? How can investors so keenly track all the stocks in the ETF and apply the same sentiment to BRK.B?
- BRK.B does not pay a dividend. The individual stocks in the Buffet quasi ETF do pay dividends. Why would one invest in BRK.B and lose out on dividends?
BRK.B individual stock
Source: Charles Schwab
Buffet quasi-ETF stocks
Source: M1 Finance. This includes reinvestment of dividends and capital gains. They don't provide an option to just look the the quasi-ETF price graph. So these two graphs isn't an apples to apples comparison. You should just look at the general shape and the ups and downs.