This will undoubtedly be the most controversial call of all the in-jeopardy names under the microscope today, but after a 27% run-up for the year so far, Berkshire Hathaway (BRK.B) might be about to surprise may of this year’s buyers — in a bad way.
It’s not a pessimism based on any fundamentals, because … well, there are no fundamentals to be dissected. Half of the companies held by the entity aren’t publicly traded, and are valued by accountants (paid by Berkshire) rather than valued by the market. Point being, the price of a share BRK.B is by and large a best-guess from the market … which means emotion and assumption can significantly dictate how it trades, and momentum begets momentum.
All well and good, but when the momentum music stops, even the best of equities can come unraveled. In other words, a correction for Berkshire might be in the near-term cards, if only because there’s so much pent-up profit-taking potential on the table, and the bulls should be getting tired about right now.