Berkshire Hathaway
Given the incredible $20 billion per year average gain in market value as the backdrop, one might wonder–will Warren Buffett be alive when Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is worth a trillion? What would drive Berkshire to that level?
First, here’s a look at how Buffett’s empire has grown over the past 14 years.
Berkshire regularly gained ground until December 10, 2007, at which point Berkshire shed about $110 billion in market value, dropping to as low as about $111 billion on March 5, 2009. Since that March 2009 trough, Berkshire is up about $215 billion.
Here’s a look at how Berkshire has performed against the other large market cap companies in the U.S. Overall, Berkshire has gone from middle of the pack player ten years ago to third or fourth largest, depending on the month.
One Trillion Dollar Valuation… Really?
So, could Berkshire reach $1 trillion in market cap before the Oracle of Omaha moves on to the next world?
Mr. Buffett is 83 years old. Given Warren’s generally good health and active mind, it’s certainly possible, perhaps likely, that Mr. Buffett could live to be 100, or another 17 years.
At a current market value of about $315 billion, how much in market cap per year over the next 17 years does Berkshire have to gain to reach $1 trillion?
The answer is surprisingly easy. Berkshire has to grow at about 7% per year, or, on average, about $40 billion per year. In all likelihood, Berkshire will be worth over $1 trillion by 2030. Presuming Mr. Buffett wants to live to see the trillion dollar day, all he needs to do is continue to walk briskly a few miles per day and keep his mind actively engaged.
Given how “easy” it would be to reach $1 trillion by 2030, one might ask—when could Berkshire realistically reach $1 trillion in market cap?
Here are three items that Berkshire Hathaway will need in order to be worth $1 trillion by 2020...MORE
