Warren Buffett thinks expensive stocks discourage speculation. Is he right?
As of Thursday BKR/A shows no signs of slowing down: the stock is up another $1,800 for a morning gain just shy of 1%.
Unlike Apple (AAPL) or Google (GOOGL) or many other companies like to do when a stock price gets high, Buffett has no intention of initiating a split. Actually the opposite: Buffett likes a high price because it discourages speculation.
In other words, he's happy to sacrifice some share-purchasers if that means he's only attracting the best ones.
Now while a stock's price says nothing about how expensive it is, it also stands to reason that people weigh a $200,000 expenditure a lot more heavily than a stock buy that only costs a couple of bucks.
That got us wondering, though, whether this price-premium that Buffett describes is really there. So we ranked the universe of American stocks in terms of price, and compared them with their yearly returns.
The top five most expensive stocks in the US are all up for the year, some considerably. Chipotle (CMG) has gained 67%.
Do you think it's wiser to buy expensive stocks over cheap ones? Use the list below to begin your analysis and let us know what you think in the comments.
Click on the interactive chart to view data over time.
4. Graham Holdings Company Common (GHC, Earnings, Analysts, Financials): Graham Holdings Company (formerly The Washington Post Company) is a diversified American conglomerate, best known for formerly owning the newspaper for which it was once named, The Washington Post, and Newsweek. Market cap at $5.07B, most recent closing price at $701.74.
5. Chipotle Mexican Grill, Inc. (CMG, Earnings, Analysts, Financials): Develops and operates fast-casual, fresh Mexican food restaurants in the United States. Market cap at $17.2B, most recent closing price at $554.38.
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
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- Compare analyst ratings to annual returns for stocks mentioned
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Seaboard Corp.(SEB, Chart, Download SEC Filings)
- priceline.com Incorporated(PCLN, Chart, Download SEC Filings)
- NVR Inc.(NVR, Chart, Download SEC Filings)
- Graham Holdings Company Common (GHC, Chart, Download SEC Filings)
- Chipotle Mexican Grill, Inc.(CMG, Chart, Download SEC Filings)
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