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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: mungofitch 🐝🐝🐝 GOLD
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Number: of 21944 
Subject: Re: Brk up again, does anyone have a clue
Date: 08/29/25 10:16 AM
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dataroma.com: DATAROMA Stock Activity History
That explains the pattern.


No, it's a myth. Those sales are entirely irrelevant to the market price (other than the precise minute of the sale). Why do people believe it matters?

Their sales don't sway the price more than anyone else selling does. Every transaction has a buyer and a seller. No, wait, maybe the buyers of the foundation shares are pushing the price higher than it would otherwise be...?
Just kidding.

The thing to realize is that capital goods (paintings, beanie babies, bitcoin) are not like investment securities. The price of a capital good is set by supply and demand. But, not understood by many people, the price of a purely investment security is NOT set by supply and demand. (not past the time frame of the window covered by willing liquidity). Berkshire has plenty of liquidity, so the sales don't affect the price trajectory past the interval that the sale took place. Rather, the price of a financial security is set by the consensus expectation of financial return.

The same old example still works: if you're selling a bag with a hundred $100 bills in it, it doesn't matter how many bags you have for sale, the bids you get won't change. What matters is not the quantity on offer, but the perceived value of the next bag.

Or take a longer term example: does the $100 billion (or whatever the number is) already sold by the foundation mean that the fair P/B is now 1.4 instead of 1.5 or similarly lower by whatever metric you like? No, a share of the company is still worth whatever it's worth, so the price today is unaffected by the foundation sales in the past. The foundation sales don't matter.

The only way the foundation sales could affect the price is like this: some fraction of the investor population who might consider buying or selling Berkshire erroneously believe that the foundation sales affect the price meaningfully, so that makes a change to the weighted average opinion of where the stock will go next. That weighted average opinion determines the current trade price in the short term. In this case the change would be microscopic, but it could happen. Still has no effect over longer time frames.

Jim
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This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
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