widenthemoat

Thanks, just want to provide some clarity on my end. Over the entire timeframe you mentioned the value has been zero. The price could go to $1.0 million tomorrow and the value would still be zero. The psychological aspect is clearly associated with the speculative aspect. The price has changed dramatically over the years and bitcoins have changed hands constantly because people thought they could buy it and sell it to the next person at a higher price. That is textbook speculation. It’s fine if people want to do that, but it is not investing. All I’m trying to do is view the world as it really is. No value has been created and bitcoin as an asset has zero value if you hold it forever. We can agree to disagree but that isn’t a dogma, it’s just the reality of the situation.

I would call a 99 share odd lot tender a way to make a buck. I’m not saying there is anything wrong with it or that I wouldn’t want to make a buck capitalizing on a market discrepancy. I just think it’s important to recognize the difference and be aware of when you’re investing and when you’re not. Many people thought they were investing in bitcoin and it was (and still is) pretty obvious that they were not.

That’s true, I guess my definition of “investor” is different in that case. I would probably call them “bearish value speculators”. I’ll probably miss out on “free money”, but it certainly helps keep one out of trouble.

I think you’re confusing investing and speculating. If you’re investing you should be able to tell me how much you would be willing to pay if you had to hold the asset for the rest of your life. Your examples (with the exception of the Panthers) would all have zero value in that situation.

I am dying laughing at this. It is scary accurate.

No idea where the bottom is, but this is starting to become a hell of a lot of fun if you’re an investor and not a speculator. I see no problem at all with what the Fed is doing. 2% inflation has always been the target. The rules of the game haven’t changed, people just don’t like how the dice are landing now. I would also argue the “savings” that potential retirees are losing were never real in the first place, just artificially created by the fed. The 15% - 20% annual returns since 2008 were a joke and obviously not going to continue. Massive inflation was always the inevitable outcome, it was just a matter of when. Nobody is entitled to 15% returns when the real economy grows at 2% and that’s what people started to think. It was banana land.

Question for the board on the BRK 10-Q: Does anyone know where the interest/dividend/other income for the non-insurance related investments gets picked up in the "Business segment data (Note 23)"? For example, interest/dividend/other income per Note 23 is $2,284 on insurance investments of $395,260. Compare this to interest/dividend/other income of $2,861 from the income statement on balance sheet investments of $450,135 (Cash: $26,534, T-Bills: $74,803, Fixed maturity securities: $21,136, Equity securities: $327,662). Thanks in advance.

Well said - very well said.

Market prices are coming down because of inflation. This is beneficial if you’re an investor and not a speculator. Why does this bother you so much?

Gave this article a quick read and the similarities are alarming. I have no idea when or if it will happen, but inflation is unpredictable and the consequences are severe. https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction. We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions... The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells. They must have skipped the criminal activity part https://perspectives.dtcc.com/articles/leading-the-industry-to-accelerated-settlement Q: Why stop at T+1 or T+½? Why not go to real-time settlement? A: Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume. For example, on a typical trading day, NSCC processes an average of about $1.7 trillion in equities transactions. The multilateral netting process reduces that number by about 98%, and the total value settled is around $38 billion. Netting allows brokerages to transfer that $38 billion between parties only once at the end of the day. In a real-time settlement scenario, netting is not possible and trillions of dollars in cash and securities must move through the financial system on a continual basis throughout the trading day. This creates massive market and capital inefficiencies, increases credit and operational risks, and increases costs between trading parties, possibly undermining the stability of the markets. Accelerating settlement requires careful consideration, industry coordination, and a balanced approach so settlement can be achieved as close to the trade as possible (for example, T+1 or T+½), without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting. I'm very confused. Why are you guys referencing settlement times for equity securities? I can quite easily transfer small dollar amounts of my money to another individual today, instantly. Anything large has limitations and takes more time, due to regulations. What am I missing? You're missing that no settlement happens INSTANTLY in today's financial system. Not for securities. Not for cash. ACH takes 3-5 business days. Stocks take 2 business days to settle. Wires can still take a few hours and cost $. Even solutions like Venmo that seem instantaneous take a few days for cash to reach your account. The only solutions where cash moves "instantly" are solutions where a liquidity provider is giving you their cash while they wait for the cash you transferred to arrive (like trading Schwab allowing me to trade my cash deposit immediately or paying a fee to use an ATM). Cash does NOT move instantly in today's system - this is a result of the plumbing and structure and not of government regulation. Also, securities will exist as tokens and be traded on a blockchain in the future as well. Maybe on a chain such as Ethereum. Companies will issue shares directly to the blockchain and be able to buy-back and remove them. You will be able to see in real time how many shares exist. You will also be able to trade them almost instantly without 3rd party involvement. This I can understand, and I see the value. Why does this mean Bitcoin is worth $50,000 though? Even if real-time settlements don’t happen, it sure seems like they do to me as the consumer. Why does better plumbing, that I don’t even see, make Bitcoin worth $50,000?

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction. We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions... The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells. They must have skipped the criminal activity part https://perspectives.dtcc.com/articles/leading-the-industry-to-accelerated-settlement Q: Why stop at T+1 or T+½? Why not go to real-time settlement? A: Real-time settlement is a simple technical solution but a very complicated market structure change. While the industry should continue to aspire to real-time, it is more pragmatic to reduce the settlement cycle in stages to capture the benefits faster. With real-time settlement in today’s market structure, the entire industry – clients, brokers, investors – loses the liquidity and risk-mitigating benefit of netting, and that is particularly critical during times of heightened volatility and volume. For example, on a typical trading day, NSCC processes an average of about $1.7 trillion in equities transactions. The multilateral netting process reduces that number by about 98%, and the total value settled is around $38 billion. Netting allows brokerages to transfer that $38 billion between parties only once at the end of the day. In a real-time settlement scenario, netting is not possible and trillions of dollars in cash and securities must move through the financial system on a continual basis throughout the trading day. This creates massive market and capital inefficiencies, increases credit and operational risks, and increases costs between trading parties, possibly undermining the stability of the markets. Accelerating settlement requires careful consideration, industry coordination, and a balanced approach so settlement can be achieved as close to the trade as possible (for example, T+1 or T+½), without creating capital inefficiencies and introducing new, unintended market risks, such as eliminating the enormous benefits and cost savings of multilateral netting. I'm very confused. Why are you guys referencing settlement times for equity securities? I can quite easily transfer small dollar amounts of my money to another individual today, instantly. Anything large has limitations and takes more time, due to regulations. What am I missing?

Maybe you should ask yourself what it is that Square, Visa, PayPal, and other payment processors who are expanding the use of digital currencies must see since they're the experts. It's not just a couple of guys on a forum telling you this stuff. The industry is rapidly moving that direction. We can talk til we're blue in the face to get you to understand what it is and that it has value - or you can just look what the experts are doing. Acquiring crypto and developing crypto solutions... The reason the transactions aren’t instant is because of regulation. The government is trying to prevent criminal activity. That alone should sound serious alarm bells.

My issue was that we have a pandemic going on and I expected some commentary around that. The only commentary around that was that NFM was closed for six weeks. Agreed, it would have been nice to hear his thoughts on the pandemic for sure. This letter seemed to have a lot of subtle undertones. Warren has never been one to call out bubbles explicitly. Maybe I'm looking at it with a bias, but it screamed very very overpriced market to me.

Likewise, couldn't disagree more with the notion that Warren should focus his communications on excogitations about the future. Those who want discussions of Snowflake and explorations of the future development of Berkshire are in the wrong place. Read through the 50-plus letters and it is apparent what Warren tries to do/likes to do with these letters and with his Berkshire-specific communications in general. There are people who would like him to do quarterly conference calls, to discuss current investments with more depth (why did you investor in this?). I mean the most glaring omission would be the dearth of Apple discussion right? They have $120 billion in the company but he did not even review basic thoughts of the business, its moat, its value, etc. Essentially the only substantive discussion of Apple was an empirical description of its buybacks. So it may be reasonable to expect a discussion, at least a minimal one, of this $120 billion investment....BUT that is not the kind of thing he generally does. That is as a part of Berkshire as much as GEICO. Also the nature of annual report documents and letters is to review the past. That is their essential function - they are concerned with what has happened to get to this point. I do believe Warren is addressing the future though by addressing the past. These letters and Warren's Berkshire-specific communications shape and cement the culture and character that he intends to endure at Berkshire into the future. Reading through 50-plus years of Berkshire letters and the way he discusses the companies they've purchased, how those companies were built, the way the Buffett Partnership became Berkshire - and how that indelibly shaped the present, and he hopes future-Berkshire, is a powerful message to Greg, Ted, Todd and their successors. The communication has been so clear and the transmission of values through these communications so powerful, for instance, that if Greg immediately started quarterly conference calls after he takes over - then every single long-time Berkshire shareholder that I know of would revolt. That is because of Warren's clear communication in these letters. In 1999 and 2000, Buffett spoke of the market environment and the minimal returns investors could expect going forward. In 2008, Buffett discussed the financial crisis in the midst of it. Today we are in a pandemic and not a word is mentioned. I had expectations that Buffett would to some degree talk about the past year and his thoughts around it. I don't think it was that crazy of an expectation and I was let down. Perhaps I should have listened to Charlie and gone in with no expectations. I was disappointed and thought it was one of the most generic letters he's written. "In 1999 and 2000, Buffett spoke of the market environment and the minimal returns investors could expect going forward." That was my exact takeaway from this year's letter. He was pretty clear on bond's being insanely overpriced, and you can deduce what you would like from that in relation to the level of the stock market.

As Charlie Munger puts it, this is a Mad Hatter's Tea Party. The economic outlook was horrible Spring/Summer 2020, but markets boomed because interest rates were forced lower. Now, the economy is starting to show shines of improvement, but with rates rising the market is coming back down to reality. The general market doesn't even care about fundamentals anymore, the only variable in their buy/sell equation is interest rates. It's banana-land in my opinion, and is going to end terribly.

This was pretty good ;D Gave me a good laugh and was actually quite catchy. Does anyone else find it ironic that during a period of intense government control and essentially total compliance by the population, that an "asset" which is reliant on stripping the government of power is the investment of choice?

I would make the argument that you don't have to invest your money somewhere. I think that institutional investors "have to" invest their money somewhere, so they can generate fees and stay in business, but that does not mean it is the rational or correct thing to do. Case in point, Berkshire Hathaway is sitting on $140 billion of cash.

Stephen Penman has some really great books on this, in my opinion. He is one of the few authors that I know of that takes both accounting and investing and intertwines the two subjects. Textbook https://www.amazon.com/Financial-Statement-Analysis-Security-Valuation/dp/0078025311/ref=sr_1_1?dchild=1&keywords=stephen+penman&qid=1611354466&sr=8-1 Lighter Reading https://www.amazon.com/Accounting-Columbia-Business-School-Publishing/dp/0231151187/ref=sr_1_2?dchild=1&keywords=stephen+penman&qid=1611354466&sr=8-2

https://markets.businessinsider.com/news/stocks/warren-buffett-partner-charlie-munger-speculative-frenzy-stocks-lack-bargains-2021-1-1029993473 Does anyone on the board have access to the letter mentioned in the article, and is willing to share? I did a quick search but couldn't seem to find it. Thanks in advance.

Isn't this a good thing? Share price down significantly and business is performing well? Are you confusing share price with business performance? Seems like an opportunity more than anything if you're a real investor and not a trader. Note: No position and don't know the business in detail, just making an observation.

+1 In my view, the market will stay expensive and "investors" will continue to speculate until the time comes when companies can fail again. The only way I see that happening is for the Fed to lose control, i.e. when inflation picks up to the point where investors in Treasury bonds demand higher rates to compensate for this. The Fed can't continue to force yields lower at this point by printing money, because this will only increase inflation expectations, and cause investors to demand an even higher yield as compensation. It will be a self-reinforcing fly-wheel, and a very ugly one at that.

The hedge against devaluation is interesting to me as well. These dollar price increases are not increasing purchasing power in real terms I suppose. I recently bet a substantial sum of money with a friend (who is an ardent BTC bull) that BRK will outperform BTC over the next fifteen years. The most ironic part of the bet...it was made in USD. His entire thesis rests on the dollar becoming worthless, yet he wants to be paid out in USD...

Long term value investor cites short term price fluctuations as indication of long term thesis success/failure I just poted numbers. I didn't make any comments. You did that. I just assumed you were letting the board know that crypto was on sale. Bitcoin +600% since this post. Doesn't produce cashflow though so cite some Munger quote and avoid independent thinking. Correction: It doesn't produce anything I used to think gold was valuable too until I heard that when you fondle the cube it will not respond. Gold has been a bit of a stinker of an investment in real terms over the long haul, hasn't it? If Bitcoin is the next gold, wouldn't it be fair to assume it would be a bit of a stinker over the long haul as well? If you could provide some numbers on how you calculate your intrinsic value I think that would help me a bit with understanding your position. Maybe I really am missing something, I dunno, but no one seems to be able to provide me any hard numbers. If this is the depth of analysis you're willing to do - yet continue to be stunned that the scammy worthless bitcoin "dies" yet continues to rebound to higher levels - you probably do not understand the thesis at the most basic level and will continue to be stunned. Stunned I shall be...I'll be patiently waiting for your intrinsic value calculation in the meantime. Clutch's gold alternative theory is at least plausible to me. I guess the next question would be why aren't gold prices going down while bitcoin prices are going up? Wouldn't an investor simply shift their 10% gold allocation to a 10% bitcoin allocation? I don't think the "market cap" of bitcoin can equal gold's current market cap unless investors become willing to allocate 20% of their portfolio to stores of value. I guess an investors 10% store of value allocation could be 100% bitcoin and golds market price goes to zero?

Long term value investor cites short term price fluctuations as indication of long term thesis success/failure I just poted numbers. I didn't make any comments. You did that. I just assumed you were letting the board know that crypto was on sale. Bitcoin +600% since this post. Doesn't produce cashflow though so cite some Munger quote and avoid independent thinking. Correction: It doesn't produce anything I used to think gold was valuable too until I heard that when you fondle the cube it will not respond. Gold has been a bit of a stinker of an investment in real terms over the long haul, hasn't it? If Bitcoin is the next gold, wouldn't it be fair to assume it would be a bit of a stinker over the long haul as well? If you could provide some numbers on how you calculate your intrinsic value I think that would help me a bit with understanding your position. Maybe I really am missing something, I dunno, but no one seems to be able to provide me any hard numbers.