IceCreamMan

From what i have seen, his pattern has been on 'media-off' from fall till Q4 results. Then a frenzy of discussion and interviews till next fall. It seems like he often does an interview with Becky Quick on his birthday, but not this year. Maybe there was a scheduling conflict for one of them.

I've followed Buffett for over 20 years now. I thought the same as you when he first mentioned 50% annualized with small sums...and I was there when he said it. But he's been asked this a couple of other times and he's always said yes...50% annualized. And I heard him as clear as a bell say the same thing again this year with a little more detail. And he also said essentially that Charlie was doing better than 50% a year in his early days before the Munger Partnership through his real estate investments and deals. It is a stunning number, but they've both said now on numerous occasions that they could do that pretty easily with very small sums...although harder now than in the past. Cheers! To return 50% a year, are we sure that Buffett is talking about unleveraged securities plays and not leveraged real estate deals? The references in this thread to Munger's real estate deals and the exponential slowing of returns as a function of AUM made me wonder this.

I think you need some assumptions about volatility and how often you rebalance (re-lever). For example, assume that the S&P has the following return sequence over the next 4 years and you re-lever once a year: +24%, -55%, +75%, +33%. The S&P avg annualized return would be +6.75% but a 1.5x S&P strategy would do -6.75% annualized.

A couple of interesting quotes in that article from Greg Abel's friend, David Sokol: “Warren stabbed me in the back in the end,” Mr. Sokol says. “None of us expected [that].” He hasn’t spoken to Mr. Buffett since. “He will be different than Warren, but that would be true of any choice,” he says. (emphasis added)

Buffett sat down in his office for a rare newspaper interview with the FT, lasting nearly three hours. At the outset, he was asked which would be the better investment to put in a child’s account — a share in Berkshire, or a share in the S&P? He did not hesitate: “I think the financial result would be very close to the same.” Should this be taken literally, or is this under-promise, over-deliver? This quote was taken from a recent interview that gfp posted in a different thread: https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

You may want to take note of the liability side of the balance sheet, too. If Berkshire used half of its cash to pay down debt tomorrow, your cash as a % of market cap measure would drop by half.

Another weakness of this theory is that marking securities to the higher of price and intrinsic value might not be considered "conservative," as in "below Berkshire's intrinsic value, conservatively determined." On the other hand, marking securities to the lower of price and intrinsic value might qualify as conservative. This would mean that Buffett uses price when he thinks a holding is cheap, but marks expensive things down to his intrinsic value estimates.

I think this is now more important and concrete. I think the way I asked the question last time must not have been clear because the responses, while good, did not address the issue directly (except for one response). I'm resurrecting this issue because I think it's probably of more interest to people now. The reason I had debated this issue earlier was the expectation that a particular situation might occur. This situation has presented itself: Apple is down from 225 at 9/30 to 171 today. On their 252 million shares, BRK now has a "loss" from last reporting date of $14 billion, less taxes in their BV. This is Apple alone. Then you've got BAC, WFC, etc. which are all down varying amounts from 9/30. Having set the stage, now the question is: If WEB thinks buying back at 207 was a good idea in the quarter ended 9/30, is the buyback threshold now: 1. Lower, because (a) securities per share amount is lower (the two-column people), (b) alternative uses of cash are more available or, at least, visible on the horizon 2. The same, because intrinsic value (and look through earnings) of those securities probably has not changed 3. Higher, because, (a) intrinsic value of BRK increases a little each quarter, (b) for companies in which they can't go over 10% they can still increase the per-BRK-share ownership of those companies in the hands of continuing shareholders by buying back stock from other shareholders, © rates are lower which serves to increase financial asset values including BRK intrinsic value? There could be other reasons for choosing either of 1, 2, or 3. Please feel free to suggest them. PS: If the fall in the market continues, it's possible that BRK BV growth is negative for the quarter. If that happens, it'll help display in the coming Qs how much, if any, of WEB's IV calculation is based on BVs. On the one hand he says BVs are now not appropriate (and I tend to agree with this). On the other hand, he's not one to change his mind/methods too quickly. Is it possible that he mentally marks his securities at intrinsic value but with an option to exit at the current market price? This would imply that when one of his securities declines in price, he maintains his original mark, but if/as it rises above his intrinsic value estimate, he marks it closer to market as he considers selling. I guess this would also mean that the effect on Buffett's estimate of Berkshire's intrinsic value depends on the relationship between AAPL's current price and his AAPL intrinsic value estimate (not just the change in AAPL's price alone). For example, if Buffett's intrinsic value estimate for AAPL is $250, then the recent price movement doesn't change his estimate of Berkshire's intrinsic value, but if his estimate is $150, it might. Also, maybe a counteracting force is that when his securities decline with the broader market, he sees more opportunities, so he's less likely to repurchase BRK at the same ratio of price/IV. One weakness of this theory is that Buffett rarely sells major investments, so it seems like maybe he wouldn't be able to justify marking up securities to market price on the assumption that he might exit soon. He held KO through thick and thin of valuations...

October 30, 2018 OMAHA, Neb. (AP) — Investor Warren Buffett’s company plans to release its third-quarter earnings report on Saturday morning. https://www.apnews.com/10844de9ade74149912d3d6b46292aef

Touching back on a previous topic, what's the explanation for Berkshire's stock price rising 5% the day after the buyback threshold was loosened, but declining slightly the day Buffett said in an interview that he recently bought back "a little" stock (for the first time since 2012)? July 18: S&P +0.22%, IAK +1.09%, BRK-B +5.27% August 30: S&P -0.44%, IAK -0.62%, BRK-B -0.72% Even if the market interpreted the buyback policy change to mean that Berkshire was likely to buy back stock soon, or if the new policy was perceived as more significant than actual buybacks, I would have still thought that confirmation of buybacks from Buffett would mean something, too.

The argument for Berkshire having probably bought back a large amount of stock this quarter is that Buffett is opportunistic. But on the other side of the coin, we have his past statements about not wanting to take advantage of selling shareholders; consistent with this principle might be doing just a small repurchase at first as a signal. In other words, would Buffett find it unethical or distasteful to do a large repurchase all in one quarter, after a long period without one?

https://en.wikipedia.org/wiki/Fermi_paradox