Hacker News Reader

I love how Berkshire uses honest measure to compare their performance. They could just use SP500 price index as others do and get away with it, but they choose the correct metric - SP500 with dividends included.

Berkshire is not paying dividends like most firms do and their stock value grows 2 -3 percent more than SP500 price index just for that reason.

View on HN

Not paying dividends is not a way to get +3% growth. You (ideally) pay dividends when you cannot grow by using the money. Berkshire grows a lot more than +3%, and it's structural: he invests the money that other people are paying him to hold via the insurance companies. Not paying a dividend has nothing to do with the growth.

But when you pay a dividend, you lose a small % in tax, or the delay between receiving the dividend and reinvesting it. That % loss adds over time and makes dividend structures less efficient than direct reinvestment. You are correct when the business cannot grow using the money, but BRK is an capital investment company, so I don't think that's an issue for them.

Because its an investment company whose mandate is capital growth

Reply on news.ycombinator.com