Today I have pruned Berkshire Hathaway substantially from the portfolio, and replaced it with shares of Essex Properties (ESS), a residential real estate investment trust that has carved a unique niche for itself in some of the most expensive markets on the West Coast. ESS is nearing its 25th straight consecutive dividend increase, and when it does, I believe the shares will become more expensive (which I hate.... especially when I don't already own the stock). ESS has a very low payout ratio, as well, which augurs well for future dividend increases. Since I held most of BRK/B in a Roth IRA, the gains will be exempt from tax and going forward, the substantial distributions from ESS will escape taxation as well.
Why am I slashing exposure to Berkshire Hathaway? The answer is because Berkshire is on a path to becoming extremely concentrated in Apple - and I already have plenty of Apple. Once upon a time, I held a very, very position in Berkshire Hathaway, but today concludes a year-long process of gifting away shares, and winding my remaining position down to what I'd call "nominal" exposure.
I've also decided to change my benchmark from SPY to the Vanguard Balanced Index Fund (VBINX) which holds the broadest exposure to stocks and bonds across the US markets. VBINX has a daily volatility that is comparable to my portfolio (which can sometimes zig while the overall market zags). Frankly, if I wanted to retire from fund management and stick everything into one fund, I wouldn't put 100% into equities. I'd want exposure to fixed income, which makes VBINX a better reflection of my opportunity costs than a pure stock fund like SPY. VBINX is not perfectly representative of a perfectly diversified portfolio, either - no exposure to real estate, preferred shares or MLP interests. Even so, it's probably a better benchmark than SPY for my purposes.
Disclosure: I am/we are long ESS.
Additional disclosure: This is not investment advice and I am not an investment advisor