zarley

JSArbitrage, you raise good points. We certainly need to be forward looking when thinking about MSFT. They do face real competitive threats, even to the OS and Office franchises that mint most of their money. But, MSFT is so entrenched at the enterprise level that those two pieces will be incredibly difficult to dislodge. IMO, they will continue to mint money there for the foreseeable future. There real problems are (and really always have been) at the consumer level, and their misses in the phone and tablet space have hurt them. But, I think Win8 has the potential to really compete well. And, they are potentially the best positioned to provide a seamless linkage of PC/mobile/tablet/TV systems. They'll be able to offer a competitive OS on all those systems that is integrated and full featured. But, they need to execute, which they haven't really been able to do well enough historically. But, I think they have a lot of potential that gets written off because they're Microsoft and not as sexy as Apple. At the risk of projecting my own experience as being representative of the general experience, let me say that I have an ipad, 2 windows PCs, one windows laptop, 3 ipods, an xbox 360, and an android smart phone. If forced to choose, I'd say you can take away everything but my windows PCs and my phone. The ipad is a great piece of consumer electronics, but to me it isn't all that useful for anything but media consumption and web surfing. From my experience windows is very nearly irreplaceable to me as a consumer. I won't be editing pictures and videos, running my media server, or storing all my files on my ipad. I think the common perception is that MSFT has been left behind and/or is dying (how could it not be, given the lost decade) and that is reflected in the price. MSFT isn't perfect, but at current prices they don't need to be.

Hehe, I choked a bit when I heard that part as well. The part about MSFT not being cash rich anymore was another bit of blatant stupidity. His whole thesis is that MSFT isn't cool and so they're just irrelevant and doomed to some undescribed awful demise. Yes, MSFT missed opportunities in mobile and tablets. Yes, MSFT needs to get those right quickly to regain footing in mobile computing and offset that threat to their core businesses. And, yes, as a large organisation they are imperfect and probably suffer from ineffective bureaucracy. But, to call the last ten years at MSFT a lost decade requires you to just ignore the facts of their actual performance. But if tripling revenues per share and quintupling earnings per share over ten years is somehow a lost decade, please serve me up another one just like it. The idea that since the stock price has been stuck at or under $30 for the last decade, so the MSFT business must suck is another common bit of nonsense he threw out. It's clear to me that in that time the business went from wildly overvalued to quite undervalued. But, that notion just never seems to occur to some critics. MSFT's peak market cap was something like $600 billion at the peak of the tech bubble. The current market cap is $250 billion. I think both of those numbers get it wrong, but $600 billion is nuts for the MSFT of more than ten years ago. I do agree with his point that breaking down the structure of MSFT may be beneficial. I might not go so far as to break it up into separate public companies, but more of a holding company approach might allow certain businesses to be more competitive. Hell with all the cash they have and all that they throw off, Microsoft Hathaway might be a cool model to contemplate. Disclosure -- long MSFT

Well, I don't know what that measures, but I scored 87 by answering 50% unless I was fairly certain I knew the answer. I'd guess I answered 60+% 50. From 0% = I'm positive it's false to 100% I'm positive it's true, 50% = I don't know (and for me I don't care). They characterize that as gaming the score system, but to me that's just the obvious interpretation. Either way, I'm not sure it means I'm really "risk intelligent", just easily bored with trivial factoid questions.

After reading most of the linked article, Mr. Cooperman doesn't really say that earning 13% in stocks takes average intelligence. He thinks average intelligence and a lot of hard work will take you a long way. And he indicates that his current expectation is in the range of 7-8%. Semantics aside, I agree wholeheartedly with the point that things other than pure intelligence (e.g., proper temperament, hard work, focus, discipline, and a good process) will help your results as much if not more than just being smart. I think Buffett has said similar things -- to the effect that IQ over 120 probably won't help you much if you don't have the right temperament and approach. I know lots of smart people who do self destructive things with their money because they have no process and get whipsawed by emotion. Additionally, I think smart people who spend all their time around other smart people lose track of what average intelligence means. Being roughly as smart as most of the people around you is not the same as having average intelligence if you hang out mostly with rich people with advanced degrees. If I had to guess, I'd say that the average IQ of the members of this board is well north of 100.

Rumor I read was that it was announcing/demoing ARM tablets. http://www.theverge.com/2012/6/14/3085126/microsoft-event-los-angeles-june-18th-windows-rt-tablets

Great Buffett video. Thanks for sharing. It won't surprise the readers of this forum, but the question at the end about Berkshire's price was nice and direct. Q: "Berkshire Hathaway, today is it a buy?" A: "Well, the businesses it owns are worth more than the current price . . . " He couldn't quite bring himself to say yes directly.

Sloppy reporting. http://en.wikipedia.org/wiki/Berkshire_Partners http://www.hoovers.com/company/Berkshire_Partners_LLC/rfxkxxi-1-1njg4g.html

I'm pretty sure that the referenced Berkshire Partners is not affiliated with Berkshire Hathaway. It's a LBO shop. http://www.berkshirepartners.com/

It's not perfect, but you can use a combination of Google News and Google Reader to create and display company specific Google News headlines in Reader as an RSS stream. For example, you could paste this link: http://www.google.com/finance/company_news?q=NYSE:BRK.B&output=rss into the Google Reader feed subscription field and it will populate Reader with the news stream for Berkshire. It's not not perfect, because I see some sources don't always make it into my company specific news streams and you'll get even passing references to BRK, but it's good for basic real-time news updates.

There are both professional and amateur investors here, so the answer may be a bit different for each group. I'm an amateur investing my own money and some family money. I've been reading and investing for probably 15 years. I got value religion after spending a lot of time reading about Berkshire and finding Parsad's old board on MSN. It's only in the last 5-6 years that I've developed real confidence in what I'm doing. Honestly, weathering the market of 2008/09 and being able to put money to work under those circumstances as well as selling cheap to buy cheaper was a great test, which I feel I passed. I'm no longer overly concerned with "beating the market". It's still the yardstick I use to see if I'm adding value (I am), but it's more about process and making good decisions. Feeling confident that I know what I own and have a good basis for my valuation makes a huge difference for me. If I'm confident about my assessment, it will keep me from second guessing myself as prices go down and allow me to add to positions as appropriate rather than panic about a declining stock price. This is all much more art than science, so I would guess that there will always be doubts. The future's uncertain after all, and you'll never bat 1.000. I think all you can do is keep reading, keep learning, and correct mistakes as quickly as possible.

BRK.a buyback at around 117,260 with price at 119,750 (~2% above buyback) I've got the BRK.b buyback price at around $78.17, so it's a little bit above that right now at $79.25 (~1.4% above buyback). Q1 BRK shareholder equity = 175,997 A equivalent shares = 1.651 BV/A share = $106,600 BV/B share = $71.07 BV/A * 1.1 = $117,260 BV/B * 1.1 = $78.17 While I don't think the estimated buyback price is a real floor (Buffett isn't obligated to buy), I don't really see it getting significantly below that level. I agree that the potential downside is somewhat limited at this point. A market meltdown and/or significant economic downturn would shrink BV, so it's not really a one-way ticket to the upside. But, I'd expect BRK to fare better than most in that kind of scenario. I added a small amount to BRK this morning.

And a link to a "script" for the presentation (The Flaws of Finance) is available at GMO's website. https://www.gmo.com/America/Research/

A nice presentation by James Montier about basic flaws in finance and how they lead to bad outcomes: How bad models, bad behavior, bad incentives, and bad policies interact to create perfect storms for markets How physics envy in finance and the abuse of mathematics endanger our industry What effects these problems have on the finance industry http://annual.cfaconference.org/2012/05/06/live-stream-session-the-flaws-of-finance/

Great links. I read the notes from Boodell; excellent coverage. Close to 29 pages covering 6ish hours of Q&A. Quite a performance by a couple of guys in their 80's. I like the format with the analyst questions thrown in the mix. Buffett was able to answer some specific insurance questions extemporaneously. Makes me think that the breadth and depth of his knowledge and understanding of BRK's operations may be the really irreplaceable thing about Warren.

Thanks for the link. Charlie has to be a tough interview. Standard questions tend toward the obvious, to which Charlie probably has to restrain from blurting out how obvious he finds the answers. Becky looked a bit uncomfortable at times.

Good discussion with Seagate CEO Steve Luczo from Forbes: http://www.forbes.com/sites/ericsavitz/2012/04/12/seagate-ceo-luczo-on-drives-zettabytes-flash-and-his-tattoo/ It's a long interview, but worth the read. A couple snippets . . . On how well financial markets value businesses: On flash memory and the exploding need for storage:

It's funny. I've managed to both buy the bottom and sell the top (in relatively small amounts) in the last couple months. While I tend to agree that all the recent activity is a good indication that Lampert is moving into the next phase of SHLD's operations, I get the feeling this was forced on him rather than it being his preferred outcome. All of the recent moves combined with a potential sale of Land's End will have shed some good assets from the core business. What he does with the cash he receives will be interesting to see. It may be a Berkshire moment (positive) or it may just be them bailing water from a sinking ship, trying to stay afloat as long as possible (negative, but less likely I think). I still own a small amount, and if prices get back down to $30-$40 I may buy more, but for now I'm mostly watching.

Orange County, CA Originally from Toledo, OH

This was one of my key take aways from The Snowball. Buffett is incredibly smart. Buffett seems to have a photographic memory for numbers. Buffett is a learning machine, and reads voraciously. Buffett is consumed with investing/running BRK. So, mere mortal, be humble in your aspirations for investing like Buffett. Alice makes the point directly at some point near the end of the book, but I forget exactly where. I liked The Snowball (warts and all) but think most of what Alice writes on her blog and for Bloomberg is nonsense aimed at riling up readers/commentors. It's the nature of the financial "journalism" these days. Whatever gets eyeballs is fit to print, even if the author knows it's twaddle.

http://www.forbes.com/sites/gurufocus/2012/03/15/fairfax-ceo-prem-watsas-favorite-picks/

WDC finalizes Hitachi deal: http://www.zacks.com/stock/news/71070/WDC+Completes+HGST+Buyout It took longer and cost more than expected to get through the regulatory hurdles, but it's now a done deal. Need to take some time to see what the details are and what they gave up to finally get it done. Glad to be past it though.

I believe the guys at Loews (L) mentioned expecting a similar process to unfold. If they don't feel too stung by their previous purchases, they will probably see some good opportunities to get more assets cheaply.

One small caveat to this though is that Buffett has not committed to buying at 110%. He may, he may not. I think he's clarified that a couple times. In particularly weak markets he may have better opportunities and he doesn't want traders to think he'll always be there to buy at 110%. With that said, it does seem likely that buying at these levels should result in investment returns at least equal to the growth in BV. But it's not quite riskless.

Given no news, I guess it's just the random machinations of Mr. Market.