Investors are Turning towards the Steady Berkshire Hathaway (NYSE:NRK.A) Stock

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By Ross Schwartz on November 22, 2014 Company

The stock market has remained quite uncertain i.e. “volatile” for the investors but these high variations can prove beneficial for investors who wish to test their fate. However, the stock market has also got some good news for people with weaker nerves and who prefer safer business over risky decisions. Billionaire companies like Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) or the famous Swiss toilet manufacturers Geberit (VTX:GEBN), have provided their investors with stable stocks and reasonable profits.

Although excellent performance may feel a bit odd after looking at two digit returns given by other European shares which showed some fluctuation owing to expected rise in tax rates in the US. The whole story gives us a conclusion that the companies with the least rise and fall i.e. volatility have the most stable stocks, where, volatility is defined as the amount of fluctuation in prices either up or down. Head of quant equity management at THEAM said that the investors are now ready to put their money on the equity market.

But they are a bit hesitant and they want to avoid any sort of risk while investing on the least volatile shares. The Reuters (NYSE:TRI) also mentioned some traditionally stable stocks like the pharmaceutical company Novartis, which was up by 29%. Moreover, the Reuters basket also received some benefit from similar profit gains from several other companies. In fact these companies show the direction in which the economy is headed to.

This group includes companies like Givaudan; a famous flavors and fragrances manufacturer or Reed Elseveir. Shares from the Swiss stock market showed good outcomes from Geberit (VTX:GEBN). This strategy also proved fruitful all over the world, the BNP Paribas (EPA:BNP) used the low volatility strategy and returned nearly 15% during the first 10 months. Besides this the Berkshire Hathaway (NYSE:BRK.A) also saw a 20% increase.

Another Lipper basket containing 53 trade funds which were tracking the low volatility shares saw an 8% increases per year. So, we see the formula seems to work; in fact this strategy has been attracting investors during the past years and more $1 billion worth amounts were spent on stocks after looking at the low volatility stock formula. This shows how much investors are fed up with the fluctuating market. The study suggests that investors now want stocks with stability.

Since October’s unrest some movements are expected as the United States are planning to finish the flow of cheaper money which had been helpful in keeping US’s banks and other businesses afloat. Ossiam’s head of business, Isabelle Bourcier told that the company is diverting its attention more and more towards low volatility ETFs. She said that the clients are now expecting that there will be volatility and this proving beneficial for us.

Moreover, reports suggest that assets in least volatile ETFs have increased to about 16 billion dollar. Whereas the amount was only $15 million; when the market was struck with crisis during 2008.