Investment Analysis
Investment choice for John: a person willing to invest but must be advised,
John, a friend to the family who is nearing retirement, has a plan to invest his retirement proceeds and savings in a stock that would give him the right return. The way John talks, he is afraid of risks, and therefore, he is not so enthusiastic about taking shares that will risk investment. John is also looking for a stock that will give a worthwhile return on his capital with minimal risks.
The US market if full of the investment opportunity that someone can invest in, but the question is, will it give the right return at a minimum risk?
Financial advisor and analyst call for one to look at the financial reports of different companies and how they have risen amidst the challenges facing industries and stocks and coming up with the right company to invest in.
John, who is almost retiring, does not need an investment that will exhaust him of thoughts of risk, he needs highly volatile stocks, and that can give him the returns for a long time. The financial analysis of Berkshire Hathaway companies reveals how the company has grown with speed in the last few years, with their trading spreading very fast.
In choosing the Berkshire Hathaway companies to invest in, one needs to look at the kind of business, the management, the financial measures, and value.
The kind of business determines how liquid the transaction will be, investors like investing in stocks that will not hold their money for a long time. The realization of return on capital should be one that is as anticipated. Failure to maintain the liquidity of a liquid asset will mean that the asset is losing value in the market and hence holding the investor’s capital with no or minimum return. The business portfolio is significant. Any business must have a collection that meets the demand in the market. By so doing this, the request will reflect into money and hence reflect into better returns for the investor. A business portfolio must meet the laws of demand and supply.
Management of a business is another factor that must be checked; business ethics and codes of conduct are significant in realizing the right returns for a business. Management plays an essential role in coming up with policies that will aid in the realization of the desirable return on capital. The administration is concerned with the adoption and implementation of macro and microeconomic policies that might affect the investment. The right systems by management will ensure that the business stays afloat amid any adverse business climate.
Financial measures play an essential role in the investment, and sound economic approaches will not put the investment in any risk. The management and the shareholder’s policies on dividends and retention of profits are crucial. When are the dividends to be declared and given shared? This question is the core interest of the investors.
The investment value is one that an investor needs to look at—the more significant the investment, the bigger the investment’s return. The amount and effort in an investment determine the overall outcome of that investment. It is also worth noting that the larger the investment, the more significant the loss when it occurs. The Berkshire Hathaway company has grown its investment with substantial profit returns that have built investor confidence. Berkshire Hathaway companies have these sound practices that will help John in his venture.
Investing in these companies will surely give John the right return in his investments, as Berkshire Hathaway companies have seen to grow the investors’ capital over time.
There is, however, a problem with the investment as it seems that this group of companies has a high appetite for risks, and investors are significant risk-takers. This should not be a problem for John as the companies have been doing this for all that time, and that is why the companies have grown over the short period.
Reference
Heese, J., Srinivasan, S., Brochet, F., & Johnson, C. (2018). Fair Value Accounting at Berkshire Hathaway Inc.(A).
Wingfield, N., Thomas, K., & Abelson, R. (2018). Amazon, Berkshire Hathaway, and JPMorgan team up to try to disrupt health care. The New York Times, 30, 52.
Cunningham, L. A., & Cuba, S. (2020). The margin of Trust: The Berkshire Business Model. Columbia University Press.
Menotti, R. A. (2017). MLMIC Shares Anticipated Timeline for Berkshire Hathaway Transaction. New York State Dental Journal, 83(2), 16.
Snider, M. (2018). Amazon, Berkshire Hathaway, JPMorgan Chase to tackle employee healthcare costs, delivery. USA Today (Online). Retrieved from https://www. usatoday. com/story/money/americasmarkets/2018/01/30/amazon-berkshire-hathaway-jpmorgan-chase-tackle-employee-health-care-costs-delivery/1077866001.
Appendix.
Sornarajah, M. (2017). The international law on foreign investment. Cambridge University Press.
Gulen, H., & Ion, M. (2016). Policy uncertainty and corporate investment. The Review of Financial Studies, 29(3), 523-564.
Sun, H. (2018). Foreign investment and economic development in China: 1979-1996. Routledge.