For those that don't know, Berkshire Hathaway is the company owned by the legendary investor Warren Buffett. He invests in a bunch of stocks that he thinks can beat the market. As a normal investor, you have two options to get in on Buffett's success. The first is to invest in Berkshire Hathaway stock BRK.B. The second is to invest in all the stocks that Buffett has chosen. Some brokerages like M1 Finance provide a quasi ETF that replicates Buffett's portfolio. I'm wondering if there is a difference between these two options.
- What does it 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 do the graph shapes of BRK.B and the Buffett 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 Buffett quasi ETF do pay dividends. Why would one invest in BRK.B and lose out on dividends?
BRK.B individual stock
Source: Charles Schwab
Buffett 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.