rmitz

I would think a spinoff would be against the culture that Warren has tried to set up. Low low probability. Basically zero when you read the letter and find that Warren is arguing that Berkshire is *stronger* for the diversity. I'd wager that anyone who is being considered for that job reads the annual letters.

I just wanted to point out that if you have contributors right now, making and profiting off the book is a bit much unless you reduce their costs further or give them a percentage cut towards their fees. I'm not sure what if any legal agreement you have contributors sign now.

The best business move does not necessarily equal the business move worth the most money. There is a moral equation here.

If you want to get a basic feel for how certain components interact in the evaluation of Berkshire, you can play with the Berkshire Hathaway Intrinivaluator: http://www.creativeacademics.com/finance/IV.html We don't have the data for the year end, but personally I think it's still at least 20% undervalued. That said I don't have a trading allocation in BRK at this point, just a smallish semi-permanent allocation which I would only sell if things look obviously overvalued.

I just want to point out one thing here. Not that I necessarily disagree, but not everyone may even accept that a secular bear market or a debt super-cycle is even something which exists. That's probably where some differences in thinking are. History is a useful force in finding today's patterns, but you can't get too close to using the patterns of yesterday to define "where you are".

There really isn't an exact percentage, since those rely on future projections of usage for medicare, medicaid, and social security, along with the entire rest of the budget. GDP itself is kind of fuzzy as well. The current debt is the only thing you can get close to "exact". You can look up the debt here: http://www.treasurydirect.gov/NP/BPDLogin?application=np The last date they have is for 1/17, with values of 11,573,578,115,566.81 for public debt, 4,859,053,374,287.89 for intergovernmental holdings (like SS holding treasuries), and totaling to: 16,432,631,489,854.70. (I believe this number might be accurate due to the debt ceiling--I think right now they're at max borrow and are moving things around to pay bills.) Current GDP is around 15 trillion. So the real actual debt outstanding is somewhat over GDP, but a large chunk of that is really owed internally, so it's not really clear you should count that. I also think it's silly to get detailed in future debt to GDP projections, because what cannot happen, will not happen. Something will change. There is still plenty of time to come to grips with these problems, but it isn't going to be easy with the environment in Washington.

I have personally met quite a number, and I have seen plenty of ugliness firsthand. Of course they claim that calling the president a "n*gger" doesn't make them racist. There have been so many things over time, but let's look at just one. There is really no reasonable way to look at the old birther camp as anything but racists, or at least race-baiters. The evidence was overwhelming, people just chose to ignore it or willfully misunderstand it. This country has a long and acknowledged history of racism. Many people thought we were turning a page in history, but it turns out that things don't happen that quickly. It was foolish to think that these attitudes change over a few short decades; much of this is just the natural consequence of the republican party targeting the area where these feelings were and are strongest. And to be completely clear, I also know a great deal of rational, totally non-racist people who identify as republican. Until recently I counted myself in this camp. But anything I've said should not be read as a complete "all or nothing" kind of statement.

I have personally met quite a number, and I have seen plenty of ugliness firsthand. Of course they claim that calling the president a "n*gger" doesn't make them racist. There have been so many things over time, but let's look at just one. There is really no reasonable way to look at the old birther camp as anything but racists, or at least race-baiters. The evidence was overwhelming, people just chose to ignore it or willfully misunderstand it. This country has a long and acknowledged history of racism. Many people thought we were turning a page in history, but it turns out that things don't happen that quickly. It was foolish to think that these attitudes change over a few short decades; much of this is just the natural consequence of the republican party targeting the area where these feelings were and are strongest.

I don't disagree with you about causality--disagreeing with the administration is not a reason to be called a racist. I certainly disagree on a wide variety of points. Sadly, large numbers of the Republican base, in addition to disagreeing, are either thinly or openly racist. I don't think it's a big step for a humor article to point this out, especially given the radical distortions an entertainment channel like Fox News regularly brings to bear to its own audience.

They don't really have competitors. Being heavily regulated, and in Midamerican's case, a utility, means you don't really have to compete in the same ways. The railroads have parts of the country where they don't really operate as a matter of history. Now this does not describe the entirety of their businesses but I believe it's a large enough chunk, and really was the core of the thesis.

I don't think there's that it's too much "encouragement" that is the problem; it's really the lack of basic financial literacy and understanding what those big numbers of dollars owed will mean.

Technically yes. http://michaelbach.de/ot/lum_hyperacuity/index.html In practice, people may not notice??? There are a lot of things that we can spot but usually we don't notice. For example, people tried doing 4K resolution in movie theatres instead of 2K and apparently nobody cares. Even without going to that level, the whole "Retina" thing was predicated on a certain usage distance. If you use it closer than that, you can easily see pixels.

Considering millions of people live in those areas... it's not really hype IMO It is hype if you don't live in those areas. Covering the story is one thing but wall-to-wall, saturation news coverage coast to coast is indeed hype. It involves New York City; and they were hit bad. That automatically amplifies the news effect.

tombgrt, you are right and I always like your posts and find something interesting! But that is exactly true for JNJ as well. During their whole history they have been great capital allocators. And they created the largest conglomerate in the healthcare sector worldwide. Also JNJ could be seen as a collection of much smaller businesses with growth potential. But growth is far from assured! Don’t look further than the last 5 years, during which EPS growth has been negative! My point is simply this: both in a $1 billion company and in a $200 billion company the man at the helm is very important. When JNJ gets “lucky” and chooses an outstanding CEO, growth resumes. Vice versa, when the chosen CEO is not that good, growth stalls. Why should it be different for BRK? There is also another point, that maybe is a little bit subtler: JNJ is much more “impersonal” than BRK. JNJ might be just seen as “the healthcare sector”, or better yet as “the best of the healthcare sector”. BRK, instead, is a very personal collection of businesses. I think it is easier for JNJ to find a new very good CEO, than it is for BRK to find the right person to follow in Mr. Buffett’s footsteps… But then again, I might be completely wrong… just food for thought! As long as return on investment is concerned, what are your views on BRK? I mean, 10 years from now? At which rate do you think BRK can go on increasing shareholders equity? And which multiple of BV do you think BRK deserves? giofranchi The key will be having a CEO, that when they feel they cannot beat the market even by a point or two over the long term, will start to return capital to shareholders. I don't really count growth much at all in terms of berkshire; I look at it as assets with a stream of income. Eventually that income will start being returned, and it will still be a very safe investment.

But a problem for whom?

I'd trade that for an unopened case of 1988 Donruss baseball cards. Among all things that resulted from the 1980s bubble in sports cards, especially rookie cards and unopened cases/boxes, I can't think of a worse investment than anything related to 1988 Donruss. I am the proud owner of an unopened case (or 2) that has been sitting in my father's garage for almost 25 years. Oh man, that set was uglier than 1990 Donruss. Well done. Ugly in looks or ugly in value? It's got both of course, but the plainest, ugliest has got to be 1986 Topps. Of course my knowledge of cards ends as of about 1989-1990. My attempt at early mogulhood was very poorly executed. I do also have somewhere a fairly good amount of pristine Shawon Dunston rookies as well. Is he still the second coming? Ugly in looks, but I was just thinking of Donruss cards. This thread actually caused me to look, and wow are cards really cheap now. One set I always liked aesthetically was 1984 Donruss, and even that's pretty cheap...and if someone were to take into account inflation, they'd probably cry.

I'd trade that for an unopened case of 1988 Donruss baseball cards. Among all things that resulted from the 1980s bubble in sports cards, especially rookie cards and unopened cases/boxes, I can't think of a worse investment than anything related to 1988 Donruss. I am the proud owner of an unopened case (or 2) that has been sitting in my father's garage for almost 25 years. Oh man, that set was uglier than 1990 Donruss. Well done.

Agreed. I can't get my girlfriend to update her SGS2 to ICS because she likes it the way it is. I think most people like a phone that will just work. If you really want the latest and greatest, root your phone and install any number of custom roms. I think most of the complaining about fragmentation is coming from bloggers and sudo developers who use/make custom roms and can't enable new flavors of android without phone drivers spoon fed to them by the phone manufacturers. The technically inclined may cry the loudest, but I have never seen a facebook status from someone complaining their phone is not getting the latest google update. However, it is much more difficult for app *developers* to target a platform like that. Two reasons: 1) The aforementioned fragmentation makes the platform a nightmare to develop for in the same consistant way--your app may work, but certain APIs may be broken, things will look "wrong", bug reports will be numerous, and if you tried to be professional, it would be very difficult to test your code on the variety of phones out there. Testing matters. 2) There have been indications that a far lower percentage of people buy software on Android. Not only is there much higher piracy http://www.gamasutra.com/view/news/176214/The_Android_piracy_problem.php http://keyeslabs.com/joomla/blogs/i-think-im-becoming-an-android/136-android-the-perfect-piracy-storm , but as you've indicated here, there are lots of people who never update anything, and so they won't be buying new software either. And if we were to quote Ballmer, a platform's success hinges on "Developers, Developers, Developers, Developers." While many people won't be buying stuff, the margin usually does make or break the overall success of a platform. Misc issues with not updating the software: 1) Giant security issues. The big viruses of the future will probably be targeting mobile devices. 2) Users have little choice for getting the touted "new android features" without buying a new phone. That may or may not work; I have heard of just as many people switching back to iOS from Android as the other way around, after dealing with hardware problems or software bugs on Android. I certainly see no reason that Android shouldn't essentially own the lower end of the cellphone market--it's much more effective than rolling your own os or licensing another one for the low-margin cellphone maker.

Well, to a point--it isn't as strong as most of companies Buffett would get involved with, as technological change can greatly change the evaluation. In this area, that change may come somewhat faster than in transportation (railroads), for example. Even railroads are at the potential mercy to long-term technological change.

Note that you don't need to do this--when you're in the trader workstation, and you bring up your account summary, right click on your temporary loan after you purchase. Then you can select to close the currency transaction (I forget the exact menu option). This way you buy exactly the amount of foreign currency you need, and it's honestly less work.

That'll be very interesting. Of course everything will depend on the price, but if they're priced according to Black-Scholes, there will probably be some structural undervaluation.

I am a former "pure" libertarian. I'd encourage you to sit down and think, think very hard about what the world would look like without government that has enough power to make and actually enforce laws. Libertarian thought tends to simplify everything into a "if the corporation infringes on my right to clean water or clean air, they are in the wrong", and that would be true, but then the system has no way to enforce anything. Power and might will make all. *Someone* will find a way to take your money. In reality the only way to keep yourself safe would depend on your own personal relationships. It would depend on the power of your tribe, which can only get so large based on your power structure. Overall wealth would deteriorate rapidly. I actually agree with you when it comes to military costs--the needs are real geopolitical concerns, but I think we don't need to spend as much as we do. The savings there alone could be huge. This is only one facet. When you actually look at how society actually works, keep following the underlying threads... I do not believe that government is purely good, and neither do I believe that corporations are purely evil; though I think we have drifted too far into territory where corporations having morals is considered a bad thing. The important thing is the balance. Freedom exists in the clash of great forces within the country, though not for all, unfortunately. I believe the answer is a more perfect union, not less. Science moves forward year by year with greater understanding. The idea that we had the perfect governmental system worked out over 200 years ago seems somewhat naive--the founders built the system to evolve over time, though they disagreed on how to do it, and how much power should reside in what part of the system. Like all of us, they were just people. Our understanding of morality also moves forward year by year, though this progress is agonizingly slow in comparison and almost no one in general pays attention. If you were to sit down and study the actual bodies of work in this area you would find they certainly do not require religion any longer to live what most people would consider a good and honorable life.

I try to reconcile this with my own portfolio, and I find it somewhat difficult. The only company I own with a PE above 11 is Berkshire, at 18, and we all know that's not the right way to look at BRK. It's probably worth noting that companies probably have a lot more cash and assets now. It's also true for me that most of my stocks have not really appreciated in this market, so that makes it difficult to take profits and sit out...

This is just a specific example of more and more businesses abdicating any interest in training, and trying to build skill sets rather than just hiring *exactly* the right person who has done exactly the same job...and most people who fit that, why would they want exactly the same job they have now? Then businesses complain about not being able to hire anyone.

Without the pensions problem, USPS would still be profitable, as I understand it. I don't understand the vitriol many people have for the postal service. I have always had great service from them, they have many more convenient locations than any of the private carriers, the time it takes is minimal, and once they came in with their new pricing model a few years ago they were almost always cheaper, unless you have some large negotiation power. I personally loathe dealing with the other carriers for actually shipping anything, and their delivery has given me more trouble over time as well. If we were to get rid of the postal service, we would have to start regulating the other carriers to make sure they will serve the outlying areas adequately. This will of course cut back on their profits, so I can't see why they would agree to that.