In early 1980, investors could buy 1 share of Berkshire Hathaway Class A (BRK- A) common stock for $285. That may have seemed expensive at the time, but by mid- 2004 the price of just one share had climbed to more than $86,500. The wizard behind his phenomenal growth in shareholder, value is the chairman of Berkshire Hathaway, Warren Buffet, nicknamed, "The Oracle of Omaha".

Born in 1930, Buffet practiced his entrepreneurial skill as a teenager by delivering newspaper in Omaha, Nebraska, and he made his first stock purchase at the age of 11. Buffet studied economics at Columbia University, under two professors, Benjamin Graham and David Dodd, who were proponents of value investing. Graham was particularly noted for advocating the principle of intrinsic business value, the measure of the company's true worth independent of the stock price.

After finishing his formal education, Buffet began his investment career in Earnest. While running several investment partnerships, he purchased a struggling New Bedford, Massachusetts textile mill called Berkshire Hathaway. By employing the company's capital in other ventures, Berkshire Hathaway soon became an investment vehicle rather than textile mill. Indeed, the original textile mill assets were disposed of in 1985.

In the years since then, Buffet has pursued strategy of buying up entire companies or taking a large stock position if he feels a company's stock is under-priced relative to the true value of its assets. For example, consider some of Berkshire Hathaway's holdings in mid-2004: 8.2% of coca cola (since 1984), 11.8% of American Express Company (1998), 9.5% of Gillette (1989) and 18.1% of the Washington Post (1973). Ignoring hot investment trends, Buffet looks for undervalued companies with low overhead, high growth potential, strong market share and low ratio of the stock price to the company's earnings (P/E ratio).

Berkshire Hathaway's annual report is "must read" for many investors, due to the popularity of Buffet's annual letter to shareholders with his homespun take on such topic as investing, corporate governance and corporate leadership. Berkshire Hathaway's annual shareholders meetings in Omaha have turned into a cult-like gathering each year, with thousands traveling to listen to buffet answer questions from shareholders. One question that has been firmly answered is the question of Buffet's ability to create shareholders value.

Questions:

1.The share price of BRK-A has been never split to make the shares more affordable to average investors. Is this a good company strategy? Why?

2.Is Buffet's strategy of buying under-priced companies stocks instead of Hot investment trends applicable nowadays? Why?

3.is a low ratio of the stock price to the company's earnings (P/E ratio) a good buy? why?