Berkshire Hathaway Is a Cyclical Stock - Is It a Buy?

Berkshire Hathaway (BRK-A), the stock managed by Warren Buffett, is one of a kind. At $106,800 per share as of November 17, 2006 BRK-A is affordable only for the wealthy. But the rest of us might consider buying class B shares of Berkshire Hathaway (BRK-B) which track the class A shares almost one-for-one. BRK-B closed at a mere $3,558 on November 17.

So when is a good time to buy either BRK-A or BRK-B? The 10-year price chart shows that the stock has a cyclical pattern. Since 1996 it has completed three major cycles and is currently on the upside on the fourth cycle. Avoid the stock for now because it is near the top of its upside price channel. Wait for the stock to peak and buy it on the upside of the next price cycle.

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Posted November 18, 2006.