Masterofnone

It is logical that traders might buy looking to sell into demand should there be an add. I would guess that much of the volume for the past several weeks involves jockeying around the calculated odds long and short. I would expect this happens any time indices are scheduled to add or remove components. When Berkshire, with its low trading float got added to the S&P there was speculation and calculation that there would be a significant price jump. The actual rise was a few percent, tempered by these sort of arbitrage trades. The actual required fulfillment of demand of indexers has been taking place by proxy, resulting in the rise in price over the past weeks.

+1 also you might check out David Waters: https://alluvialcapital.com/

Also trimmed PCYO. Seems like a more enthusiastic market reaction than warranted by the results. (And that massive 150k buyback.....)

Think about what you just wrote. Is that truly how you would act if you found the cure for cancer?

Likewise, will not sell. Don't have any ideas of anything as good with current valuations.

But there is buying now in anticipation of that demand, with the intent to sell into the mandated adds.

It is a turn of phrase, but to me, the "trap" is money insulates some from the realities of experience and blunts compassion and empathy.

My crystal ball is always cloudy, but I agree with Sleepydragon. There seems to be jockeying around any index add well in advance and price action rarely exceeds 7% intra-day and often fades. A portion of every day's price action for the past month or two has likely had a component of odds making on an index add. If I had to guess, I would expect a 4-5% jump near open with a 2-3% gain overall. There is buying now with the intent to fill the needs of the indexers in the future. Now if there isn't an addition, the price will likely drop significantly.

I'm too lazy to do the exact cost averaging between all the lots, but the original shares from 2000 are ~11.3% (vs ~7.9% from the S&P) and for example shares purchased late January 2021 come in at about 22% vs ~15% from the S&P over the same time-frame. I purchased many many times over the years when the shares became cheap. (Know what you own.)

I have been riding on the Berkshire train for 25 plus years, holding through ups and downs. It has always been a huge percentage of my total investments, and buying over the years on selloffs and holding has resulted in returns about 3.5% above the S&P 500. The only shares sold during this time were those required after recently placing our first taxable shares purchased in a charitable remainder trust. In the past few weeks, I've been selling off Berkshire in IRA accounts. Lowest cost basis $32.xx. Is it an attempt at market timing? To be honest with myself, I would have to answer yes, remembering the period between early 2008 and 2009. But now gliding through my 7th decade and financially secure, I no longer feel the need to be fully invested. Is Berkshire ever likely to be priced at 2x book again? Who can say? But My guess is 1.3 is more likely. Disclosure: I'm a mediocre trader as proven over a long time period.

There seems to me to be only two possible reasons the old fellow is raising so much cash: A huge purchase (think Mars) or a conviction that the odds are good for a substantial "correction" in the markets. He doesn't like to buy things when prices are dear, so my odds-making would be that he is substantially pessimistic about where markets are headed. Any thoughts?

What a gift it was that Muddy Waters issued that shoddy slash and run report! It was a great example of the value of knowing what you own. Many of us picked up shares that day on the cheap. +46% or so in about 9 months. Thanks Carson!

You are certainly correct John- operating earnings wouldn't cover half of that $20. (Though investment gains are recurring.) Distributing ~$80 billion per year would certainly alleviate future capital allocation decisions (for better or for worse). The dividend question has been fully flogged. But when WEB is gone from the picture, things inexorably will be different in some way. Not advocating, just wondering what I or others, would do should Berkshire declare they couldn't find acceptable places to employ new capital.

Perhaps, but would you sell or hold? What if it was a $30/per share dividend? Just food for thought.

It is not unlikely that Berkshire starts paying a dividend when WEB bows out. It is actually an interesting point to ponder. What would you do if tomorrow, WEB announced his retirement and the initiation of a $20 per (B)share dividend?

+1 Especially Doctors Without Borders.

For what it is worth, my niece and nephew who both have been upper level lacrosse players tell me that Cascade Lacrosse and Maverik Lacrosse are first tier brands. No close second in helmets.

Note to self: Short the ^VIX when over 50.

I think it's pretty damn exciting. He's going to do something with that surplus-surplus cash. There is either something already in the works or he feels the optionality of having cash for future bargains is more valuble than the expected return on AAPL at 33x. I'm glad to have him make these decisions for me.

Thanks. In this case,I would not at all be surprised if we see another 5% reduction on Monday. I'll be looking to add shares a couple of hours after market open in the silly amusement of trying to be precisely right. We'll see how cloudy is my personal crystal ball....

My guess on the price action is it is an attempt to exit an existing short position through additional shorting during a period when the company can not repurchase shares. There are investors who know what they own and why. But there are investors who act on headlines and never look at the details of an earnings report. Price action is their cue. "Oh man the price is plummeting, earnings must have sucked!", and they sell their shares. If the past in these sort of situations is any guide, it will open lower Monday and be back to 52 week highs within a month.

No big regrets here, but I'd be financially better off if I knew about the power of compounding when younger. My wife and I knew about frugality and saving but nothing about investing. (The result was being debt free for all except the first six years of home ownership with the result that we had tremendous freedom as far as work/life balance.) Still. I could have started investing in my mid-thirties kind of missed about 12-15 years of potential compounding. It's a good thing to teach your kids.

Mr. Buffett is rational and proud of his achievement creating Berkshire. He knows that it is a certainty that at some point he won't be steering the ship. Don't worry about there being a clear and concrete plan in place.

In the last 25 years nobody "made a killing" buying Berkshire. But by repeatedly buying when it was cheap it provided a wonderful risk-adjusted return. The down side was always covered, certainly to the detriment of total returns, but that is the price paid for safety. And the surprises will mostly be pleasant ones, likely even when the old fellow dies or passes the reins.

Meaningless conjecture- The price action the last two days has the feel of shorts covering on the bid and short-term traders taking their 10% on the ask.