The Ultimate Guide to Berkshire Hathaway: Strategies to Buy, Hold, and Profit

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is an iconic name on Wall Street. So is the name of the company's CEO, Warren Buffett. It is the kind of stock you brag about owning when you are at a dinner party.

But the interesting thing about Berkshire Hathaway is that it is unlike just about any other company in the world, which changes the strategies you should take when buying, holding, and profiting from the stock. Here are a few tips and tricks to consider if you own or are considering buying Berkshire Hathaway.

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1. You shouldn't think about Berkshire Hathaway the same way you think about other companies

Berkshire Hathaway is a conglomerate, with a massive list of businesses under its umbrella. Most companies do one thing. Conglomerates usually do a few related things.

And Berkshire Hathaway does a shockingly large number of things that have nothing at all to do with each other. Think selling furniture and car insurance. Trains and utilities. Pipelines and auto retailing. Home sales and specialty parts manufacturing. Making paint and... you get the idea: The list of businesses within Berkshire Hathaway is very eclectic.

And on top of all of that, the company owns a portfolio of stocks that includes a massive technology company, oil producers, and a transaction processing firm, among others.

Image source: The Motley Fool.

This is because of Warren Buffett's approach to investing. He likes to buy good companies when they are reasonably priced, if not on the sale rack. That includes both individual stocks and the portfolio of controlled companies within the conglomerate.

Berkshire Hathaway is more like a mutual fund than a regular company. You are, effectively, buying the investment vehicle of Warren Buffett and his team.

2. There's never a bad time to hire a good money manager

There are better and worse times to buy Berkshire Hathaway stock, but there's never really a bad time to hire a good money manager. So what does an investor do with that, especially given the fact that Buffett and his team has been selling assets from the common stock portfolio to raise cash? The answer is actually more about emotions than stocks.

BRK.B data by YCharts

It is very hard to time the market. It probably isn't worth the effort of trying. However, it does seem pretty clear, with Berkshire Hathaway's stock near all-time highs and Buffett selling equities, that the company's shares might be expensive right now.

Will you know when to jump in and buy? Will you have the emotional capacity to buy when everyone else is selling? The answer to both questions is probably not.

A better plan is to buy a little bit of Berkshire Hathaway today and make a plan to add to your position in the future if the stock goes down. This way, you'll have a stake in the company and a reason to add when other people are selling. It will help get you over the emotional dissonance that is always there for contrarian investment decisions.

But the key to this is thinking about Berkshire Hathaway as more mutual fund than stock -- look at the investment as an opportunity to invest alongside one of the most famous investors of all time, and his team.

3. Be prepared for a big transition, but don't be overly worried

Berkshire Hathaway's success is directly attributable to Warren Buffett and Charlie Munger. Charlie Munger has died, and Buffett is quite old. There are material changes coming in the management of the company and, truthfully, there's no way to know what will happen when Buffett is no longer at the helm.

However, Buffett's investment approach is very important, and the company is steeped in his ways. Simply put, he has trained the people who will eventually replace him.

The really important piece of the approach, meanwhile, is focusing on buying good companies (both in the investment portfolio and the owned company portfolio) and ensuring that there are good people running them. The next step is to simply hold on to benefit from the long-term growth of the companies in question.

It isn't exactly rocket science; it is, as Buffett has long said, it's more about temperament. It seems highly likely that the leaders set to take over the helm have a similar temperament to Buffett and Munger, since it was these two men who trained them.

Buy the B shares of Berkshire Hathaway

So the big plan is to get your foot in the door with a small position in Berkshire Hathaway, even though the stock looks expensive today. When the price goes down, which it will at some point, use that starter position to keep you in the game and help you get over the emotional distress of buying more during a pullback. The linchpin is the view that Berkshire Hathaway is really about hiring a good asset manager, which is how you'd look at buying a mutual fund.

There's one last little wrinkle. Most investors should buy the B shares. The A shares are so expensive that it costs nearly $800,000 to buy a single share, while the B shares trade around $500. The B shares are not only easier to afford, but they are more liquid and, thus, provide more flexibility to the investor.

But if you do buy, make sure you hold on through the market's ups and downs so that you can benefit from the company's well-honed, deeply ingrained investment approach.

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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.