Readers Respond! These articles are generating reader response. Many are writing in with questions which we will answer in coming weeks. While it is great to receive favourable comments, please let us know if you disagree as well. We need all input in order to provide the most interesting columns.

Mystery stock identified Reader Sally Frith called in and correctly pointed out that it is Berkshire Hathaway, a conglomerate blue chip company managed by one of the greatest investment managers of the 20th Century, Warren Buffett (so voted by Newsweek). As another reader pointed out, Berkshire Hathaway is "one of the best buys on the board right now- all the advantages of a blue chip mutual fund with no management and trailer fees''. If you have not read Buffett's autobiography, "The Making of a Capitalist'', consider getting it. It is a fascinating look at an ordinary individual whose investment prowess is extraordinary. The book is also a good tutorial on many aspects of the financial and investment world and, the delights of having a hamburger and Coke every day for lunch -- Mr. Buffett is also an unpretentious man who prefers plain dining! Stock Splits Why do you suppose that the cost of one share of this stock is so high? Warren Buffett does not believe in stock splits, or issuing new shares of stock because both of these methods dilute the value of stock held by current shareholders. It can also potentially lessen the control of the current shareholders. As a very young man, he persuaded friends, neighbours and relatives to invest with him (in some cases very small amounts). All of these people are millionaires today! With the value of the stock this week at $58,000 per share, not many people can afford to purchase an entire share; however, smaller amounts are available in increments of one-thirtieth (1/30) of one `A' share.

Insurance 101 Seventy percent of the holdings of Berkshire Hathaway stock are insurance companies, including General Re. Mr. Buffet figured out a long time ago that well-run insurance companies have lots of available cash (collected from premiums and accrued reserves). This cash must be invested to achieve a greater rate return over time than the rate of catastrophic loss paid out on claims from insureds. Not many companies have this steady stream of revenue available for investment. Insurance companies really operate in the arena of estimating, controlling and making a profit on risk, both in the stock markets and the insurance markets. It requires tremendous skill, vision and intellect to run an insurance business and if successful, the company and its employees capitalise big time! Readers, there is a reason that Bermuda has the highest number of Chartered Financial Analysts per capita in the world. They analyse all the risk! (See a future article on reinsurance for the rest of us).

52-week high and low, Beta On the mock portfolio chart this week are two additional reporting concepts. The 52-week high and 52-week low and the beta point for each stock. Analysts and investors use all of these to measure stock volatility.

The Gap, pardon the pun, has a rather small gap between the 52 wkhigh and low.

I question whether this stock will go anywhere given the notorious fickle fashion consumer. Sales are down; quality and durability of Gap clothing is not outstanding either, so should we dump this one and replacing it with one or two others a bit more dynamic? Under consideration is Tommy Hilfiger Inc.

(TOM) who started his clothing fashion trends appealing to inner-city youth, had them popularised by young hip music groups, then made the leap into global mainstream. I see many Bermudians wearing the Tommy Logo clothing and accessories. He has been so successful (Net income rose 36 percent for the fiscal year) that the firm is considering purchasing Calvin Klein, another American fashion standard.

Controversial Products? Or should we consider something more controversial, such as Victoria's Secret? Recall the million-dollar diamond encrusted "gift of intimate wear'' for the lady who has everything from the man who can afford to give everything, featured on the front of the Nieman-Marcus catalogue a few years ago? Does controversial translate into successful? Should we invest in controversial in order to make money? Do investors allow principles to come into the equation? Victoria's Secret reached a global audience with the launch of their Website and an IPO (initial public offering) a while back. Of course, the Website promptly crashed from the sheer volume of interest. While this companym like The Gapm has had problems with quality control and durability of product in manufacturing process, there seems to be no correlation with current revenue potential.

The marketing and presentation of these fairly expensive necessaries in no way resembles the utilitarian approach of say "Fruit of the Loom''. Oops, I forgot! Fruit of the Loom recently filed for bankruptcy protection. Perhaps that says it all; the consumer has chosen illusion over plain and ordinary and once again the free market has made the decision. What do you think? Should we carry this stock? Local stock Additions to the portfolio Own your own piece of the rock. We have added two local stocks traded on the Bermuda Stock Exchange: Bank of Bermuda and Belco, both dependable, reliable, dividend producing companies.

Looking for safer, reliable stocks We know them and we use them in one form or another. More on them next week.

Safer, reliable stocks After extolling the virtues of utility funds because they were reliable, sturdy, plodding necessaries last week, the flight of capital and sell off continues in the US stock market. And yesterday morning, the stock market continued to fall, many numbers are in the red for the second week in a row.

Market chatter is now all about investing in quality. Quality tech stocks, quality old economy stocks. Bearing this out, the only indices registering an increase yesterday were utilities as investors sought the safety and reliability of defensive stocks.

While it seems "everyone can make money in an up market'', it takes a special skill and resilience to operate in a down market. Generally though, statistics bear out that remaining fully invested over the long-term has brought a positive return.

The information in this column does not represent a recommendation to buy or sell stocks or any other investments. Readers needing specific assistance should seek professional advice from their financial advisor.

Martha Myron CPA CA is a Bermudian, holds a Series 7 NASD licence and is a United States federally authorised tax practitioner. She is Programming Chair for the International Association for Financial Planning/Bermuda. Questions regarding this article may be sent to her at 234-0290 or Email: marthamyron(at)northrock.bm Ordinary man, extraordinary stock picker: Warren Buffett