Is Berkshire Hathaway the Smartest Investment You Can Make Today?

Despite the stock's incredible track record, however, there are reasons it may not be the smartest investment you can make

But there are also reasons it could be a great choice

Here's what you need to know

Why you should avoid Berkshire Hathaway The first big reason that an investor might not want to buy Berkshire Hathaway is that it doesn't pay a dividend

And it doesn't appear ly that it will anytime soon

So, if your goal is to generate income from your portfolio to pay for living expenses in retirement, you will not want to buy Berkshire Hathaway stock

Image source: The Motley Fool

The second reason to avoid Berkshire Hathaway is its complexity

The large insurance operations within the company's portfolio of es typically lead it to fall into the finance sector

But the truth is, it is a widely diversified conglomerate

It has exposure to industries as varied as retail, railroads, and manufacturing and a whole lot more in between

If you to keep your investments simple, this will not be the best option for you

In that vein, Berkshire Hathaway is kind of a mutual fund, given that you are, effectively, allowing Warren Buffett and his team to invest on your behalf

So, trusting Buffett has worked out very well for investors

But if you to directly handle all your investment decisions, owning Berkshire Hathaway bably won't be a great call

Letting the Oracle of Omaha do it for you That said, as the chart above highlights, owning Berkshire Hathaway stock has been a big win for investors over time

So, trusting Warren Buffett and his long-term investment apach has worked out well

From a simplistic level, all he's doing is buying well-run companies when they appear attractively valued and then holding for the long term to benefit from the companies' growth over time

Only, if it were really that simple, every investor would have an incredible performance record

And that's just not the case

Investors who are willing to let an expert handle their hard-earned savings could do much worse than buying Berkshire Hathaway

That said, while the S&P 500 index has been heading higher lately, Berkshire Hathaway stock has been falling

At least part of the reason is that Buffett has announced his intention to step down as CEO

This change must be carefully thought through because a new CEO can lead to significant shifts in the way a is operated

But that's unly to happen at Berkshire Hathaway

First off, Buffett is stepping down as CEO, but he will remain chairman of the board, which means he will remain Greg Abel's boss

It is unly that Buffett will allow Abel to fail miserably without stepping in to help

And then there's the not-so-subtle fact that Abel was, effectively, trained by Buffett

Just Buffett was trained by famed value investor Benjamin Graham

Charlie Munger, Buffett's former partner, vided some educational input, too

Abel has a very impressive educational background as an investor

While he will most certainly do things differently, it seems ly that he won't abandon Buffett's basic apach to chart an entirely new course

Berkshire is a smart pick for the right investor Berkshire Hathaway won't be the smartest investment choice for all investors, despite its strong historical stock performance

But if you don't mind entrusting someone else to handle your savings and believe that Abel will carry on the Buffett apach, it could still be a very attractive investment choice for your portfolio

The one remaining caveat is that Berkshire Hathaway is so large today that future growth may be less impressive than past growth

Reuben Gregg Brewer has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Berkshire Hathaway

The Motley Fool has a disclosure policy.