Buffett's a Genius Again

Not Buffett. He's on record as saying he doesn't believe in stock splits, since a high stock price, he insists, discourages buying by short-term traders. The high price and the limited number of unsplit shares certainly do limit trading. Typically, fewer than 1,000 A shares trade a day.

For the past 10 years investors have also been able to buy B shares in Berkshire Hathaway New(BRK.B Quote) that represent 1/30 of an A share and carry no voting rights in the company.

So it's unlikely that any other stock would climb anywhere near Berkshire Hathaway's price before management announced a stock split.

Second requirement: years of appreciation in the price of the stock. Buffett has guided Berkshire Hathaway to an average annual gain of 11% for the past 10 years. If Buffett or his successors could deliver that same appreciation in the years ahead, Berkshire Hathaway A shares would break $200,000 sometime in late 2012 or early 2013.

Gosh, even if the shares gained just 5% a year, the stock would break $200,000 in about 13 years, in 2019. With inflation likely to contribute at least half that rate of appreciation, I think $200,000 by 2019 at the worst is a lock.

Nobody Likes to Wait

To an investor, though, there's a huge difference between $200,000 a share in six years and $200,000 in 13 years. I suspect that investors in Berkshire Hathaway would be very unhappy with a 5% annual return over the next 10 years. Look at the kind of squawking that Buffett's sluggish performance in 2004 (4.2%), 2005 (0.82%) and the first half of 2006 (3% through June 30) elicited.