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My Two Cents

Sell, Warren Buffett?

Chris Farrell May 16, 2007

Okay, Warren Buffett doesn’t need any financial advice from me. But it’s free, so here goes.

The legendary stock-picking head of Bershire Hathaway says he’s in the market for a $40 billion to $60 billion deal.

But instead of buying, why not sell off the pieces of the Berkshire Hathaway empire? As Buffett’s finance mentor, the great Ben Graham put it, stock price movements offer “an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.”

Mr. Market is saying now is a good time to sell. The stock market is strong, investors are confident and, most importantly, private equity bucaneers are flush with cash. They’re buying everything they can get their hands on, and price seems less and less a concern. Deals are going at higher and higher prices. Buffett should take advantage of the private equity bubble.

After all, Buffett (76) and his long time partner Charlie Munger (83) aren’t getting any younger. And I doubt that anyone else–even a team of skilled managers–can replace them in running $168 billion holding company with a diverse range of businesses, ranging from insurance to ice cream.

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