Berkshire Hathaway price too high, stock suspended. What's going on (fun story)?
Prior to answering that, let me tell you a little story. At the moment I am in the process of going through some paperwork which requires me to obtain old documents such as birth certificates, naturalization papers and the like. I have been dealing with various governmental agencies. And I get it. These documents were originally issued in the 1970s, coupled with the fact that there are Covid related precautions, so some delays are to be expected. However what I don't get is this. The papers I am requesting are coming from the government themselves, yet they still require manual confirmation by notaries, clerks and other officials to ensure that they are not forged/fake copies. Another thing that boggles my mind is that when it comes to payments, the government still requires money orders to be issued rather than accepting one of the numerous forms of electronic payments available today (and I'm not even referring to crypto here, simply using wire transfers/zelle/venmo etc...). Mind blown. Despite claiming that America is such an advanced industrialized country, a leader in global finance, and many of the other things we are ranked at or near the top of the charts, we actually rank much further down the ladder than most claim.
We now return to our regularly scheduled program, Berkshire Hathaway share price being too high. What is going here is the following. The biggest number the computers at Nasdaq (and other exchanges) can handle is...
429,496.7295
Sounds random no? Well here is the reason this is the case. It's actually quite fascinating and ties back into math which is why I will most likely highlight this story in my classes this week. Nasdaq's computers record prices in a compact number format that uses 32 bits, made up of ones and zeros. When originally launched in 1971, that formatting naturally placed a limit at the following number, two to the 32nd power minus one, or 4,294,967,295. Given that stock prices are generally stored using four decimal places, the highest possible price is $429,496.7295. Bingo. Problem created and normally it wouldn't be an issue, except for the Oracle of Omaha has made it a point to not split his class A shares. That, coupled that his company has performed in a phenomenal manner over the past 6 decades, have helped Berkshire Hathaway reach that milestone. Well done Warren.
Needless to saw that Nasdaq and other exchanges are scrambling to fix their computers so that this will not be an issue much longer. Let me leave you with 2 fun factoids (answers below):
- What is the second most expensive stock, in terms of nominal price?
- How does Warren Buffet tend to sign greetings/holidays/birthday cards?

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