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Do Like Berkshire Hathaway Inc. (BRK.B) Or Buy Up The Balance Sheet A Little Bit So You Have Less Volatility: Kevin O’Leary

Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) is renewed for its unique strategy of pursuing riskier investments, with higher yields than the ones offered by the governments. However, do not be mesmerized by the large returns as a scratch in profits for Berkshire Hathaway Inc. (NYSE:BRK.B)’s $500 billion assets is a deep hole in the budget of a regular investor. CNBC tried to capture both of these aspects in their recent report.

How Slower Growth, Falling Oil Will Boost This Airline

The global economy is unwell as many countries face problems of different nature and the dollar got relatively strong. Berkshire Hathaway Inc. (NYSE:BRK.B)’s strategy for this particular situation is to invest high-risk high-return and get the most of it.

“And right now the dollar is king and every other currency in the world are the king’s subjects. […] So the US dollar is seen as a safer place in this global turmoil, our earning are much better than the Treasury Yields,” said Jim LaCamp, UBS.

Notwithstanding the facts above, it’s a treacherous tactic for a relatively inexperienced eye as it carries too much risk, which only few can afford. A safer solution than Berkshire Hathaway Inc. (NYSE:BRK.B)’s one is to hedge some of the potential losses through much safer financial instruments.

“Investors should realize that everything north of the common share: the convert, the preferred share, the senior debt, the LIBOR resets, all of these instruments get paid before the dividend, that Warren if talking about. And in my portfolio and I think in many Americans’ should also consider: buy up the balance sheet a little bit so you have less volatility,” said Kevin O’Leary, “Shark Tank” investor.

Now, this doesn’t mean that every single investment should have a back-up in the form of more secure assets. It just works as a reminder, more of a safety belt, for those that don’t have neither Warren Buffett’s power of almost $45 billion nor his experience of more than half a century of doing business.

Disclosure: none

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