Stock Index? Not For Me!

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The advice that many financial advisors hand out is that you should invest in the index, since individual companies are too risky. While this may have some truth to it, there are always conglomerates for us to invest in. North America has some of the richest and most diverse conglomerates in the world just waiting for your investment.

Berkshire Hathaway

I own stock in Berkshire Hathaway (NYSE: BRK-A), and I always have. Oh, not that $130K version; I’m in on the Berkshire Hathaway (NYSE: BRK-B) B stock. When it comes to diversification, huge floats, and huge moats, I think you’d be hard pressed to find a better company than Berkshire Hathaway.

One of the big things about Berkshire Hathaway is the continuous growth in assets. Over the last ten years they have grown from $169 billion all the way up to $392 billion at this point last year. The stock has consistently grown throughout its time on the stock market, and I don’t think it'll ever go away.

Berkshire continues to look for investments all around the world. The company is in so many different and diverse fields that I think it’d take up a page just to list them. Insurance is definitely the company’s biggest division. Insurance provides the company with the float that it uses to invest in retail, jewelry, rail, and home furnishings, to name a few.

Like I said, I own Berkshire and I would buy more!

General Electric

General Electric (NYSE: GE) is humongous. I honestly don’t know how CEO Jeffery Immelt is able to keep his sanity while managing all of the aspects of this company.

You likely have a GE appliance in your kitchen. If you don’t, you will most certainly have received light from one of their light bulbs, received electricity from their turbines, or flown in a plane that was made possible by GE equipment.

The company has seen income falter in the last couple of years. This was mainly due to their finance arm during the economic downturn. There is also a lot of debt, more debt than my mind can even work out: $315 billion as of last December, which is extortionate. I don’t think the debt will be detrimental to GE though.

Analysts seem to like the company, as they have given it a 1.82 mean recommendation. There’s also a dividend in there, unlike with Berkshire. GE yields 3.52%

Brookfield Asset Management

While this $22 billion company is not in the same league as the previous two, Brookfield Asset Management (NYSE: BAM) does bring a very diverse, global asset set to the table.

Brookfield has been performing well in recent years. Over the last ten years company managers have brought the assets from $14.49 billion all the way up to $91.03 billion, which is where they currently stand.

Income has been a bit shaky within Brookfield; they were actually negative in 2009, but have since recovered. Analysts absolutely love the company and they have given it a mean recommendation of 1.38. I think that’s excellent, and I’m even considering moving some of my money to the company.

Brookfield Asset Management also offers investors a 1.57% yield in order to keep returns a little lively.

Final Verdict

I like all three companies, and I would invest in any of them in an instant. Owning a single stock is much more interesting for me than owning the market as a whole, and these three companies allow you to be invested in a lot of different fields at once.

 

 


Ash1402 owns shares of Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway and General Electric Company. Motley Fool newsletter services recommend Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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