As you're probably aware, here at Fool.com we generally hold Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) in high regard. In fact, I just finished outlining three reasons it might be a great idea to add Berkshire to your own portfolio.
Even so, we'd be fools (with a small "f") if we didn't recognize there are two sides to every coin, and Berkshire's stock certainly may not be for everyone.
Without further ado, here are three perfectly acceptable reasons you might consider selling your shares in the company Warren Buffett built.
1. You want more from your investments
Why should you own Berkshire if you see better opportunities to put your money to work elsewhere? Don't get me wrong: I still think Berkshire is a solid company and that its shares will probably continue to outperform the broader market indexes over the long run. But that future outperformance will be markedly less pronounced than in years past. After all, considering Berkshire's mammoth market cap of more than $250 billion, it seems a mathematical impossibility for Buffett to maintain his nearly half-century streak averaging 19.7% annual book value growth for much longer.
Heck, Buffett himself wrote in his 2007 shareholder letter:
Berkshire's past record can't be duplicated or even approached. Our base of assets and earnings is now far too large for us to make outsized gains in the future. ... Though we can't come close to duplicating the past, we will do our best to make sure the future is not disappointing.
Consequently, if you're looking for a company with any realistic chance of replicating Berkshire's early gains, you might be better off considering a smaller financial holding company, such as Markel.
2. You need the money elsewhere
Do you have a credit card balance that just won't budge because it's racking up 24% interest? Remember, not even the world's greatest investors can predictably achieve that rate of return over the long run, so it's probably -- no, definitely -- a bad idea to try to invest your way out of that debt. Instead, though it may pain you to do so, you'll be better off selling your shares of Berkshire to pay down the principal balance.
Or maybe you're just worried about how you'll buy this week's groceries or pay the mortgage. Once again, that's a perfectly valid reason to sell Berkshire -- or any stock, for that matter. Going even further, as a general, rule the only money you should keep in the stock market at all is that which you won't need for at least another five years.
3. You want to cut the fat
Last but not least, maybe you've enjoyed Berkshire's outperformance for so long that it now represents an outsized percentage of your overall holdings. To be sure, Berkshire closed last week at all-time highs, so everyone who bought shares before then is sitting on paper gains. While there's a great argument to be made for letting your winners run, it's seldom a bad idea to occasionally rebalance your portfolio in an effort to minimize risk.
On a related note, maybe sitting on large gains simply makes you horribly uncomfortable. As a result, if you're convinced you'd feel much better just locking in those profits, by all means do so. After all, not everyone can remain stoic in the face of today's volatile markets, and investing decisions are inherently personal. In the end, no matter what everyone else says, you should do what's necessary to let yourself get some sleep at night.
Fool contributor Steve Symington owns shares of Markel. The Motley Fool recommends and owns shares of Berkshire Hathaway and Markel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.