I recently reviewed Warren Buffett’s first purchase of Berkshire Hathaway stock. On December 12, 1962, Warren Buffett obtained 2,000 shares of Berkshire through his investment partnership at a price of $7.50 per share. He paid his broker Tweedy Browne & Co. $20 to execute this trade.
It is crazy to calculate the half-century impact of this $20 brokerage trade. If Buffett bought his initial shares of Berkshire Hathaway through one of these modern discount brokerage houses that offer two months of free trades or something similar, he would have ended up with approximately 3 more shares of Berkshire Hathaway. More specifically, he could have bought 2.8888 more shares of Berkshire.
As of Friday’s close, Berkshire Hathaway traded at $314,339.00. If Buffett could have avoided that brokerage fee, he could have increased his present-day net worth by almost a million dollars—those 2.8888 shares of Berkshire would be worth $905,296.32 today.
Of course, the original share lot of 2,000 Berkshire shares that he still owns is now worth $628 million. On the net, things worked out more than all right. Still, it’s crazy to think that Warren Buffett’s brokerage fee on a single stock trade of BRK could have grown into a net worth that would rank in the “top 3%” of American wealth.