james22

http://www.gurufocus.com/news/146183/berkshire-hathaway-is-now-traded-at-the-lowest-valuation-in-decades#146504 Lol, what are the odds, poor guy. :D (It was 2000 btw and not 1999 but oke.) http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/brk-buying-back-stock-110-of-bv!!/20/ Funny. I bought the day of the last buyback: http://www.early-retirement.org/forums/f44/brk-again-64054.html

Hussman...

Ah. Thanks, M.

How can book value not reflect the change in cash and debt as well? I do believe P/B is positively impacted, but only because I believe $1 of PCP/KHE > $1 cash. Again, I did just add to my position, believing BRK's listed P/B of 1.38 really now below the one-year P/B low of 1.37 (though that only the median P/B since the last buy-back announcement). (Probably too early, but I'd too much cash/not enough patience.)

I don't think it [P/B] really changes. Cash down, debt up, assets up...balancing. http://boards.fool.com/bv-after-pcp-31867693.aspx?sort=whole I did just add to my position today.

BRK's safety makes the position size less an issue for me. And while cheap, I've been waiting not for something else, but for a market correction (bear/crash) that would make even cheaper. Seems overdue, but maybe it silly not to add at P/B 1.4 whenever can?

What strikes me as new is the overvalued market which makes BRK look relatively unique: Conclusion: Berkshire Has Everything I Look for in a Stock: It's Safe, Cheap and Growing at a Healthy Rate Extremely safe: Berkshire's huge hoard of liquid assets, the quality and diversity of its businesses, the fact that much of its earnings (primarily insurance and utilities) aren't tied to the economic cycle, and the conservative way in which it's managed all protect Berkshire's intrinsic value, while the share repurchase program provides downside protection to the stock Cheap stock: trading 22% below intrinsic value, without giving any credit to immense optionality, with 42% upside over the next year Intrinsic value is growing at roughly 8-10% annually Seems few safer, cheaper, faster growing alternatives.

Any thoughts?

Whitney Tilson: Berkshire Hathaway Now Worth $275K A Share A Safe, High-Quality, Growing Company With 42% Upside Over the Next Year http://www.valuewalk.com/2015/08/tilson-berkshire-hathaway/

David Stockman CNBC Interview: Tops In—–Next Comes An Epochal Deflation http://davidstockmanscontracorner.com/david-stockman-cnbc-interview-tops-in-next-comes-an-epochal-deflation/

Likewise: "The Worldwide Credit Boom Is Over, Now Comes The Tidal Wave Of Global Deflation" http://www.zerohedge.com/news/2015-08-03/worldwide-credit-boom-over-now-comes-tidal-wave-global-deflation

Thanks, Dazel.

FRFHF @ $475

Quality Minus Junk http://www.econ.yale.edu/~shiller/behfin/2013_04-10/asness-frazzini-pedersen.pdf

VGPMX at 10-year low, 80% off high.

The long-lived exception: if wealth was such that risk or return didn't matter, could go 100% BRK/SV index fund or inflation-adjusted annuity/treasuries.

There's been an slow over-reaction for a long while already, purportedly due to concern over the transition. This is much more of an opportunity to go 100% into BRK. For those who would like to, can rationally do so over time. I'm one such, surely there are more out there. The headline like opportunity that you're talking about will be short-lived and the 100%ers are not likely in that pond. There not many arguments for 1 position portfolios, given the free lunch of diversification, I'd think there more headline-like than rational-over-time 100%ers. But just answering the posed question: nothing has yet happened that would put me 100% into 1 position, including the long-while BRK opportunity. Only something like the short-lived example would.

Even in today's overvalued market, I'd go 100% BRK if it dropped to book value with Buffett's passing as I'd believe it an overreaction soon corrected.

Being early is indistinguishable from being wrong.

Moreover, our impression is that equity valuations are actually only mildly less extreme “when you compare the returns on equities to the returns on safe assets like bonds.” The reason is two-fold. First, the “returns on equities” here are typically taken to be earnings yields, which as we’ve frequently noted, are affected by cyclical variations in profit margins that make them notoriously poor indicators of long-term prospective returns (see Two Point Three Sigmas Above the Norm and Margins, Multiples and the Iron Law of Valuation). Second, if one cares to actually examine reliable measures of prospective equity returns, bond yields don’t have a tight relationship with those prospective equity returns at all – as the chart below should demonstrate. The belief that equity valuations are “not so high when you compare the returns on equities to the returns on safe assets like bonds” is a common one, but is based on overgeneralizing a very limited period of history. Specifically, the “Fed Model” – the notion that equity earnings yields and 10-year Treasury yields should move in tandem – is an artifact restricted to the period between 1982 and 1997, when both equity and bond yields fell in virtually one-for-one lock-step – bond yields because of disinflation, and equity yields because of what was actually a move from extreme secular undervaluation to extreme secular overvaluation. The Fed Model grossly misinterprets this data as if it were a fair value relationship between stock yields and bond yields. The model had its origins in the chart below, which appeared in Alan Greenspan’s July 1997 Humphrey Hawkins testimony to Congress. Warning: The apparent one-to-one relationship between interest rates and equity yields embodied in the Fed Model is entirely the artifact of this single period in history. If one excludes the 1982-1997 period, the historical correlation between 10-year Treasury yields and 10-year prospective (and actual realized) equity returns is actually slightly negative over the past century, and is only weakly positive in post-war data. I realize that some observers will get upset about that statement, but it's just an empirical fact. The current 10-year Treasury yield says less than investors imagine about the valuation or likely 10-year returns of U.S. equities. I do believe that yields and prospective returns on stocks and bonds are likely to be correlated in strong inflation-disinflation cycles, but prospective equity returns have a far larger and more variable speculative component than investors seem to appreciate. http://www.hussmanfunds.com/wmc/wmc150511.htm

And of course after Greenspan's comments the dot-com bubble promptly burst...four years later. That was one of the implications in my comment. ;) Then six years later the Nasdaq was actually cheaper than where it was when initially made that comment. Is it a reasonable plan to hold cash until valuations are recognizably attractive? Given it make take another six years? Or is such patience inhuman?

VDH's rebuttal of Guns, Germs, and Steel: Carnage and Culture http://www.amazon.com/Carnage-Culture-Landmark-Battles-Western/dp/0385720386

It'll be interesting to see if the Harley-Indian rivalry splits or expands the market.

"Rice burner" and "crotch rocket" betray your sensibilities, you whippersnapper. And I recognize I'm in the minority, just correcting your market size estimate. HOG might be a buy, dunno. I only have the sense that their Project Rushmore has been pretty well received? But that may be only in the motorcycle press, who rate things that Harley owners do not (reference their like of V-Rod versus its rejection by the Harley faithful). And I could see Indian becoming a peer (but again, I'm not the target audience). What do you think of their bikes? Maybe Polaris is the better buy. http://www.forbes.com/sites/greatspeculations/2014/02/11/resurgent-indian-motorcycles-could-hurt-domestic-sales-of-harley-davidson/ http://www.bizjournals.com/twincities/news/2014/01/31/in-motorcycle-contest-is-indian.html?page=all

No. Only the many (not everyone) on Japanese cruising bikes might rather a Hog if they'd cash, but not Ducatis or BMWs. (Ducatis are for many on Japanese sport bikes and BMWs for many on Japanese touring bikes, if they'd the cash.) Yes. The crotch rocket gets old after you turn thirty. I had a Ducati , pretty much solely because I could get it for $12 grand versus $16 - 20 for a similar used hog at the time and it wasn't as embarrassing as a rice burner. I also had a 600cc honda CBR when i was a baby. Got married an now I drive an SUV.... None of the others are aspirational bikes, at least in the states. Finally, no posers in America who have never owned a bike, go and buy Ducati gear to wear just for the brand associations. Really? Because I'm 51, been riding for over 40 years, commute daily, tour twice yearly, and take a (track) class about every other year on Japanese sport bikes, plan to go European when I'm back in the US full-time, and I'd quit tomorrow if I had to ride a Hog.