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"Endgame" For Warren Buffett?

After a very fruitful and successful investment career, Warren Buffet has reached what might be considered an "endgame" position. His original 1956 investment partnership of $105,000 has morphed into Berkshire Hathaway Corporation, worth well over $100 billion. Depending on the market values on a given day, Berkshire is now one of the ten or so largest market cap stocks in the United States, having passed up former stalwarts like Citigroup and General Electric. As such, Berkshire can make meaningful investments in only stocks of say, the S&P 100, or outright purchases of stocks in the S&P 500, or their equivalents abroad. It will be difficult for Buffett to continue the market, assuming that he can do so.

There are basically three ways for him to try. The first is to substitute faster-growing foreign stocks for large cap U.S. stocks. That is, he may try to beat Exxon Mobil using the stocks of Petrochina (owned in the past), or Petrobras of Brazil, to play the emerging markets theme.

The second way to try to beat the market is to try to time purchases near lows. or obtain special terms, as Berkshire did with its large stakes in General Electric and Goldman Sachs.

The third way is to avoid stocks of clearly dying companies such as International Paper and Eastman Kodak, a quasi-index strategy of "kick out the losers," which, if successful, will lead to modest outperformance.

Long BRK/A.