IceCreamMan

Question: What is the productive life of solar PV panels, and do they produce the same amount of electricity year-over-year? Answer: The productive life of solar panels and the electricity production from these panels over time depend on factors such as climate, module type, and racking system, among others. The reduction in solar panel output over time is called degradation. NREL research has shown that solar panels have a median degradation rate of about 0.5% per year but the rate could be higher in hotter climates and for rooftop systems.[1] A degradation rate of 0.5% implies that production from a solar panel will decrease at a rate of 0.5% per year. This means that in year 20, the module is producing approximately 90% of the electricity it produced in year 1. Source: https://www.nrel.gov/state-local-tribal/blog/posts/stat-faqs-part2-lifetime-of-pv-panels.html

The quantitative easings will continue until morale improves.

"we believe the company has finally hit a nexus where it is far more focused on reducing its cash hoard through stock and bond investments and share repurchases." "we expect the bulk of Berkshire Hathaway’s excess capital to be focused on stocks and bonds for the insurance investment portfolio--with an eye toward boosting the yield on the portfolio" I wonder what gives him the idea that Buffett is more focused on making bond investments now. Also, this is sort of interesting-- questioning whether Buffett is breaking his written promise to shareholders: This raises the following questions in our mind: Is Berkshire buying back shares more recently at prices at or above chair and CEO Warren Buffett’s and vice chair Charlie Munger’s calculation of intrinsic value?

It's a little weird that he's even commenting on the book value of an internet company. It's like talking about the weight of smoke or the height of a snake.

Some folks might find this interesting: https://en.wikipedia.org/wiki/Kelly_criterion

Although that used to be the case, the alpha from time travel option selling has been almost completely arbitraged away.

Although his conclusion may be statistically correct, it looks from the chart like valuations tend to be highest when long-term rates are in the 3-6% sweet spot.

Hussman concludes that low interest rates do not explain high valuations: Notice something. When interest rates have been extremely high (above 10% or so), valuations have been reliably low. But at rates below 10%, there is no reliable relationship between interest rates and valuations.

It looks like he explains some of his reasoning in the middle here: BECKY QUICK: All right, this next question comes from Jason (Plawner) in New Jersey. “As both a Berkshire and Occidental shareholder I was encouraged to see your investment in the company, but with passing weeks, it became evident that your investment facilitated Occidental management’s ability to avoid a shareholder vote on the Anadarko acquisition, a very shareholder unfriendly outcome. “This deal proved to be irresponsible and expensive from an OXY perspective, and ultimately, very value destructive for OXY shareholders. In my view, it also permanently hurt Berkshire’s reputation in the marketplace. “Please comment on this unfortunate outcome and tell me why OXY shareholders and other market observers shouldn’t feel this way.” WARREN BUFFETT: Well, yeah. We said right from the beginning — although we didn’t certainly expect the degree of what’s happened — we said, essentially, when you buy into an oil — a huge oil production company — you know, how it works out is going to depend on the price of oil to a great extent. It’s not going to be your geological home runs or super mistakes or anything like that. It is a — it is a investment that depends on the price of oil. And, you know, I — when oil goes to minus $37 — (laughs) — it happened the other day for, I guess, it was the May contract. You know, that’s off the chart, and — If you own oil, you should only own oil, if you expect these prices to go up significantly. I don’t know whether they’ll go up significantly or not. We’re in the transaction. Our commitment was made on a Sunday when the management of Anadarko favored Chevron. And Chevron had a breakup fee of a billion dollars and the Occidental people had been working on it for several years. And it was attractive at oil prices that then prevailed. And it doesn’t work, obviously — it doesn’t work at $20 a barrel — it certainly doesn’t work at minus $37 a barrel — but it doesn’t work at $20 a barrel. And everything the oil companies have been doing, whether it’s Exxon or Occidental or anybody else, it doesn’t work at these oil prices. That’s why oil production is going to go down a lot in the next few years, because it does not pay to drill now. That’s happened at other times in the past. But the situation is, you know, you don’t know where you’re going to store the incremental barrel of oil, and oil demand is down dramatically, and for a while the Russians and the Saudis were trying to outdo each other in how much oil they could produce. And when you’ve got too much in storage, it doesn’t work its way off that very fast. Now, you will have production of oil go down in the United States significantly. It does not pay to drill in all kinds of formations that paid before, and it doesn’t pay — it doesn’t pay to have paid the price that oil was trading at in the ground a year or two ago. And to that extent, if you’re an OXY shareholder, you know you’ve — or any shareholder in any oil producing company — you’ll join me in having made a mistake, so far, in terms of where oil prices went. And who knows where they go in the future.

We have to account for the fact that he was probably maxing out his contributions each year, right? I wonder how much that changes the actual time-weighted return. Still probably extremely high. I'm curious what types of investments he made, i.e. typical market cap, typical holding period, type of situation/business, etc.

You could try: Insert > Text > Text Box Drag the corner Or: Right-click a cell > New Note

Nothing new here, but collects a few old quotes from/about John Malone, Warren Buffett, and Bill Gates. https://markets.businessinsider.com/news/stocks/warren-buffett-bill-gates-microsoft-stock-ipo-john-malone-liberty-2021-6-1030496996

https://www.marketwatch.com/story/berkshire-hathaways-ceo-in-waiting-has-a-lot-of-warren-buffett-in-him-plus-more-11620156155

It sounded like RichardG was comparing puts and calls that were each X% OTM, i.e. different strike prices from one another. A call option on an equity that's 10% OTM will usually have lower implied volatility than a put option on the same equity that's 10% OTM. Put/call parity works for options of the same strike, but not different strikes.

Would it make sense for this volume to be accounted for by Berkshire repurchases? It seems like repurchasing the A shares would strengthen the voting power of non-selling shareholders like Buffett.

Maybe he doesn't have a webcam.

This is an interesting guess, Viking, thanks for sharing. Agreed.

Was anyone else surprised that he didn't address the pandemic?

Berkshire buybacks: 2018: $1.3 bil 2019: $5 bil 2020: $25 bil ($9 bil in Q4) As I think thepupil pointed out, the company has been repurchasing shares at a 6.3% annualized rate over the past 5 months. I think the implications of this activity for Berkshire's future are very positive.

How could they resist the politics section? Which handles do you think they're using to post in the politics section?

I think he's training for the 2020 Olympics.

But until the cap gains is realized, the deferred tax liability serves as an interest free loan that continues to be invested in the particular security, which otherwise would not be available to invest if the gain is realized. This of course only makes sense if the particular security itself is worth holding for that period of time. Here's my question. Why not just borrow against a stock, and hedge with puts that are priced appropriately in order to avoid realizing gains? Buffett can pull an Ericopoly. True. I guess we need to consider the accrued tax liability separately from future tax liabilities not yet accrued. This reminds me of the question of how to value float. Let's say Berkshire has a liability that we don't expect it will have to pay for 100+ years (hypothetically). Can we approximate the value of this liability as zero? Buy puts and borrow against... that would turn our equity position into a synthetic call option. Maybe we'd want to sell covered calls too, unless we wanted to be long volatility. I'm not sure how taxation would work if we created a synthetic short position by buying puts and selling calls with the same strike against our long positon-- the IRS might have a rule about that.

... In a world where Berkshire is "forced" to sell equities because of insurance obligations, there will have to be truly massive insurance losses that would offset the capital gains, plus they'd have to burn through a whole lot of excess cash and fixed income. I think we'll probably agree to disagree on this if you think accruing a countercyclical (gets smaller in bad times, bigger in good) 0% interest rate liability that can be deferred is substantially similar to paying that liability today. Even though the liability accrues, one still gets 100% of the dividends of the asset and also gets to use the assets to increase liability (financial/insurance float) bearing capacity. there's theory and then there's practice. the theory is that double taxation is bad and could be a reason for berkshire discount. the practice is that berkshire pays a significantly lower tax rate than many individuals and is extremely tax efficient. it rarely realizes material capital gains and pays a lower tax rate on dividends; it is a much more tax efficient investor than almost any non-index strategy. As an operating company, BNSF and BE have favorable tax dynamics. ... If we're interested in calculating the true economic value of Berkshire's accrued capital gains, we'd want to consider the expected timing of future sales and the expected capital gains tax rate at the time of future sales, right? It's too bad that if we push out the capital gains tax liability into the infinite future (representing a scenario in which Berkshire adopts a strict policy of never realizing capital gains), the size of the capital gains tax liability gets infinitely large, which I think negates the time value of pushing it out into the infinite future... right?

How do you avoid being too early? The market can always decline further.

Would paying a dividend be consistent with the Berkshire's culture and management's philosophy? It seems like management views capital allocation as central to the company's purpose. Presumably the reason it is holding so much cash right now is that it intends to deploy it at more favorable prices in the future, and it believes the result will be better than if shareholders were holding it. When Buffett and Munger are gone, a new generation of allocators will control the capital. If Berkshire was ever going to pay a dividend, wouldn't it have paid it already? (Now watch Buffett announce a dividend in his annual letter this weekend...)