Prediction: Buying Berkshire Hathaway Stock Today Will Set You Up for Life

If you invested $10,000 in Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) 30 years ago, how much money would you have today? That's a trick question. You couldn't have invested only $10,000 in Berkshire in 1995 for three simple reasons: (1) Only Class A shares traded at the time, (2) the Class A share price was much higher than $10,000, and (3) fractional shares weren't available yet.

Let's suppose, though, that those real-world obstacles didn't exist. A hypothetical investment of $10,000 in Berkshire Hathaway 30 years ago would be worth a whopping $14.2 million today, assuming you never sold. Buying Berkshire would have set you up for life.

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But would buying Berkshire Hathaway stock today set you up for life? I predict that it could.

"Virtually certain to get satisfactory results"

To be clear, I'm not predicting that you'll make $14.2 million, or anywhere in that vicinity, by investing in Berkshire Hathaway stock today. However, I think the stock will make patient investors a lot of money over time. Why? I believe what Warren Buffett has said in the past.

In his 2013 letter to Berkshire Hathaway shareholders, Buffett shared good news for non-professional investors. He wrote, "In aggregate, American business has done wonderfully over time and will continue to do so -- though, most assuredly, in unpredictable fits and starts." The "Oracle of Omaha" argued that investors didn't need to try to pick winners. All they had to do was "to own a cross-section of businesses that in aggregate are bound to do well." Buffett concluded that an investor who diversifies and keeps costs low "is virtually certain to get satisfactory results."

Granted, Buffett suggested that a low-cost S&P 500 fund was a good investing vehicle to achieve this goal. But everything he said applies to Berkshire Hathaway, too.

Berkshire represents a well-diversified cross-section of American businesses (and a few international ones, too). The conglomerate has over 60 subsidiaries. Its investment portfolio, which currently boasts assets of around $268 billion, includes stakes in over 40 publicly traded companies.

Want to invest in consumer goods, energy, financial services, healthcare, industrials, retail, technology, and utilities? Berkshire Hathaway provides an easy way to do it with one stock. It's almost like an exchange-traded fund (ETF) but with no annual expense fees.

The big question for Berkshire

There's a big question for Berkshire, though: What happens when Buffett no longer leads the company? Buffett is 94 years old. Although the legendary investor seems to be in good health, he won't be able to run Berkshire forever.

Buffett himself doesn't shy away from this big question. He wrote to Berkshire shareholders in his annual letter this year, "At 94, it won't be long before Greg Abel replaces me as CEO and will be writing the
annual letters."

Abel, 62, is the CEO of Berkshire Hathaway Energy. He was named vice-chair of Berkshire's non-insurance operations in 2018. Buffett revealed in 2021 that Abel would be his eventual successor to run the entire company.

He will also make the final call on which stocks are bought for Berkshire's investment portfolio. Buffett told Berkshire shareholders at the company's annual meeting last year: "I would leave the capital allocation to Greg, and he understands businesses extremely well. If you understand businesses, you'll understand common stocks."

Importantly, Buffett has consistently maintained that he isn't a stock-picker but is instead a "business-picker." I think Berkshire Hathaway will be in good hands when Buffett is no longer at the helm.

What could cause this prediction to fail?

Even well-reasoned predictions don't always come true. What could cause my prediction to fail?

One easy answer is that anyone who doesn't invest enough in Berkshire Hathaway won't be set for life regardless of how well the stock performs. The adage that "it takes money to make money" is correct.

Another simple way investors who buy Berkshire Hathaway stock today won't be set for life is if they don't hold the stock long enough. While it takes money to make money, it also takes time.

Finally, the possibility exists that Berkshire Hathaway's large array of businesses won't be as successful in aggregate as I anticipate. I wouldn't take that bet, though. I doubt Buffett would, either.

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Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.