Dynamic

Just thinking through sanity-checking that estimate, re-evaluating BRK.B and deciding if it's worth investing more today... First, looking in the rear-view mirror. In my case, my original purchase at $49.71 (post-split equivalent price) on 15th July 2003 has compounded at 10.01% CAGR to $196.44. Book Value per B share has gone from a split-adjusted $30.662 in 2003Q2 to $124.95 in 2017Q3 (i.e. 14.25 years, so CAGR = 10.36%), before adjusting for tax changes potentially inflating BVPS, but perhaps having a smaller effect on inflating IV. If, as Valuehalla suggests, the tax changes and mark-to-market adjustments cause BVPS to reach about $148.14 per B share, let's say by year end, it changes the growth in BV to 4.83x in 14.5 years, or 11.48% CAGR, helped by this one-time boost and the generally good rate of compounding. I paid 1.62x BV just after 2003Q2, and it's now at 1.57x BV without adjusting for the tax changes that might be coming. I'd normally not be too keen to pay that price nowadays, aiming to wait for a bigger margin of safety. However, this thread is helping me re-evaluate and adjust my thinking for the current circumstances. In the intervening 14+ years we've had one sizeable financial crisis that presented some rich pickings for Berkshire among temporarily distressed companies, where we'd expect it to do especially well. We've seen a lot of whole company acquisitions and plenty of capital spending at utilities with a reasonable but regulated return on equity, and we've seen float and earnings grow at a good clip too. For reference S&P500 Total Return (SP500TR) has risen 3.57x (or 9.23% CAGR) over the same period. In Aug 2003, Shiller P/E was 24.64, and in Nov 2017 it was 31.29. So I'd imagine the S&P500 has benefited slightly from an upward multiple re-rating over that period, while BRK.B is similarly rated, yet the S&P500 still trailed BRK.B's return slightly, showing the value of the robust growth in fundamentals at BRK. Looking forward in the long term In my concentrated retirement portfolio I'm certainly not nervous about retaining my 55% BRK.B weighting at 1.6xBVPS, feeling more comfortable in BRK than S&P500. It's the only company I'm happy to hold above 50% weighting (in fact I'd be happy to go to 100% or a little more at a real bargain price e.g. <1.3x BVPS). I would probably revise ValueHalla's figure for my own use and say that I could reasonably anticipate 9%-13% CAGR for BRK.B (or perhaps I should rephrase that as not expecting more than 7-10% CAGR above inflation and for inflation to be in the 2-3% range) from a starting point of Friday's closing price of $196.44. That seems like a decent return over the long term 10-15 year horizon, with a fairly high certainty attached to it, and it will still allow me value-trading opportunities to boost my compound return when I see other quality companies trading at large discounts to IV with decent prospects of re-rating. I prefer to use real-terms figures rather than predict inflation, and I project our potential retirement date and draw-down using a 3.5% real rate of return (based on my 'low-end' portfolio valuation, which is typically below market price and based on a low-ball estimate for each stock's value derived from fundamentals) and 3.5% average draw-down (again as percentage of the low-end valuation, not market valuation) to produce a certain income (adjusted upwards by CPI inflation index from a figure we set in 2015 currency) without reducing the real value of our portfolio (until we have unusually large expenses, perhaps medical or care expenses towards the end of our lives). In practice, I intend to keep a cash buffer to avoid drawing down heavily during severely depressed markets and further reduce the small chance of suffering a reducing income during retirement. Shorter term outlook - likely price-action and potential opportunity cost over next 12-18 months Assuming the tax bill is passed, I can really see reported BVPS reaching $145 to $150 per BRK.B either at 2017YE or 2018Q1. This does indicate that BRK.B is likely to have a soft price floor at 1.2x BVPS of around $174-$180 pretty soon, though a market crash could plausibly see the price fall 10-20% below such a soft floor if the mark-to-market prices of securities held fall sharply and the mark-to-market component of BV falls with it. Within a year of sound business growth at Berkshire, I could quite easily envisage the BVPS being around $160-$165 (around 10% above ValueHalla's estimate if the tax cut goes through) and the soft price floor of 1.2xBVPS being around $192-$198. If this is true, it would imply there's little downside risk over about a 1-year horizon, short of a market crash, which I'd see as a positive to BRK's long-term value that we can ride out. We started today with just over 10% cash in our portfolio and we're saving heavily, adding cash at about 8% of our current portfolio valuation each year, about two thirds of which is straight cash and one third since a couple of months ago is a cash/employer European style option scheme that can be exercised in late 2022. The latter will see us save at about 14% of our current portfolio value over 5 years (ending 2022), and it cannot be worth less than the cash saved and could be cashed out at our discretion for the cash saved in the event of a market crash or other source of deep value high certainty opportunities. I've just invested substantially all of our cash position in BRK.B at an average price of about $196.69 (£147.19 GBP after commissions) bringing our BRK holding to about 65% portfolio weighting and our cash to <0.1%. Downside risk appraisal: Most likely, I think our downside risk on this purchase in the next year is about 8-12% unless the tax bill fails to be brought into law (perhaps <5% chance of the bill failing, in which case maybe it's 25-30% short term downside, and gradually reducing this downside as BVPS should most probably rise by 10% CAGR organically). In about 12-15 months' time assuming the tax bill passed plus 10% 'organic growth' in BVPS and IV (beyond the effects of the one-off tax cut), I'd imagine the 'soft floor' of 1.2x BVPS will have reached about our $196 buy price and should typically continue to increase at about 10% per year in typical years. I imagine the tax cut will (with >85% probability) stimulate the economy enough to stave off a market crash for at least another 18 months, but we may well have a market crash at any time between about 18 months and 8 years from now (I cannot guess when, but some time between mid 2019 and late 2025 seems quite plausible, given the typical frequency of such things). In the event of a crash, the mark-to-market element of BV may fall enough to see us dip below 1.2x last-reported BV, then to see reported BV drop accordingly in the next quarter. I'd expect to see Berkshire deploying cash wisely and in large quantities and coming out of the crash stronger than they went in.

That YouTube clip is worth revisiting. Warren was pretty clear that it would be tough to hit 10% if interest rates remained as they were in May 2017 (i.e. practically zero short term, and I guess less than 3% long term from vague memory). Maybe 10% over the next 10 years if interest rates were a little higher (but not dramatically higher). Since then we've heard that rates are likely to be eased upwards over time, though they could easily plummet again if there's another economic bust. The question after at 1:18 is relevant now with the latest US tax bill going through government. Tax savings at the utilities would pass direct to the customers, which is only right, as we're allowed an after tax return on equity and if taxes were raised we'd be compensated for that. Unrealised gains in securities would accrue to us directly. Other businesses - to some extent the savings get competed away, and to some extent it does not. It's certain that some would be competed away and some would flow to shareholders and it's very industry-specific whether it's competed out and to what extent.

It's always good to take medical choices with a good dose of skepticism, but epidemiology is very hard. I recommend searching on ScienceBasedMedicine.org - such as these results: https://sciencebasedmedicine.org/?s=Vitamin+D&category_name=&submit=Search and also Ben Goldacre's BadScience.net, which in this instance appears to have fewer relevant search results but is often good on health matters: http://www.badscience.net/index.php?s=Vitamin+D Both of these resources take great care to balance the evidence and Science Based Medicine is particularly strong on using Bayesian reasoning to account for prior plausibility. These are far better places to learn about health matters than the popular press or TV shows. In this case, a pretty decent overview seems to be https://www.skepticalraptor.com/skepticalraptorblog.php/vitamin-d-review-another-overrated-supplement/#more-8480 In general, vitamins attract a lot of cranks and hopeful hypotheses that while superficially plausible frequently turn out not to work as expected in the complicated environment of the human body when subject to scientifically robust testing. Megadosing vitamin C actually shows some signs of correlating with and quite possibly causing slightly worse health outcomes than simply obtaining about what the body needs. A plausible hypothesis is that free radicals are vital to function of the immune system, e.g. killer T cells rely on free radicals to destroy 'invading cells', and that megadosing disrupts this. But dark-skinned people in northern climes are frequently advised to take vitamin D supplements in winter because their pigmentation reduces the absorption of sunlight and their innate production of vitamin D is insufficient at that time of year. I would be surprised if there's much danger to modest supplementation with most vitamins and the preference is usually to obtain as much of your daily allowance as possible through a varied diet. But I'm not a medical professional, so please take medical advice before making a major step into or away from supplementation, especially if you are pregnant or have brittle bones (in the case of Vitamin D), have any medical conditions or regular medication. Likewise be wary of herbal medicine, traditional chinese medicine etc, as some of it has real side effects, such as St John's Wort which can cause liver damage, and some of it (especially bought online) is not the declared species or is adulterated with undeclared pharmaceutical drugs as powerful as Viagra (based on some analyses covered by the Skeptical media in the last year or two).

It'd be fun, though if it's only as accurate as a fortune cookie or a horoscope, it would be nothing more than fun Barnum statements and certainly not useful like the wisdom in his shareholder letters. I'm sure he could do better! The best fortune cookie I ever had read "Help! I'm trapped in a fortune cookie factory"

I'd say a large overshoot of IV is possible in many companies, but unlikely to reach 2xIV nowadays in the case of Berkshire given Buffett and Munger's stated intention that they would seek to discourage extreme undervaluation or overvaluation so that incoming/outgoing shareholders do not benefit disproportionately from the misfortune of their counterpart in the trade. I think Nonetheless there's a wide enough trading range to really load up when it's cheap and to lighten up when it's more fully valued. In my case, I last bought just under $125 (Feb 2016, which was <1.25x last reported BV at the time, and later turned out to be <1.2x BV at year end) but I sold a good chunk at a somewhat undervalued $140 (May 2016) to load up on Apple, which was extremely cheap at $95 at the time. I'd have needed a much higher price to sell Berkshire and hold the cash, and so far that hasn't happened (except for a temporary need to 'demonstrate I had £X cash available to be withdrawn' for a one-off purpose a few years ago, which required me to sell a lot of my shares and show it had been in my account and available for withdrawal for a specified period, then I was able to buy back later). If I had used borrowed money such as a mortgage extension to buy extra Berkshire (which I've not done yet but might consider in future at prices <1.3xBV) then I might be tempted to sell to cash at 1.55-1.60xBV to pay off the loan or lock in gains, depending on circumstances due to the different risk profile.

I answered 'materially undervalued 10-30%' But that depends on the implied forward return when priced at IV. To me that implied forward return is maybe 7-10% without a great deal of near term downside protection. So even though I think that IV is more than 11% over current market price of $195-$200 per B share, I'm reluctant to buy or to sell at the current price, a price that reasonably well accounts for the expected tax cuts.

The power to accelerate and the shielding are enormously difficult challenges for human interstellar travel near light speed. With sufficient power it might be possible to deflect particles. Charged particles could be deflected by magnetic fields much as with the Earth - the cause of the aurorae. Photonic momentum transfer may be able to deflect uncharged particles just enough, or a number of mechanical shields could be flown ahead of the spaceship, some of which would deflect enough particles and some of which might be sacrificial, absorbing them but deteriorating over time. If robotic craft were shown to be sufficiently protected it might be possible to send humans. I imagine we would need enormously powerful fusion reactors or antimatter matter storage and annihilation to provide sufficient power for propulsion and protection, which are bound to be a very long time in reaching sufficient specifications. Solar sails/laser sails may be sufficient to attain much of the required acceleration away from Earth but again enormous technological advances would be essential to approach a reasonable rate of acceleration. At this stage it's very hard to guess whether these challenges are surmountable. I would have thought they are given enough time and technological advance.

I was trying to consider it all from the human traveller's frame of reference as it's they who have to live for the length of time it takes in their frame of reference and it's they who will experience an acceleration similar to Earth's gravitational acceleration. To them, it doesn't matter so much how many generations may have lived and died on earth, as something 1,000 light years away will always take at least 2,000 year round trip time to visit and receive the signal back in Earth's frame of reference. For it to be viable for the travellers themselves, they need to complete it well within a human lifetime (unless it's a breeding population of explorers). This completely ignores both the increasing power required to accelerate the same amount as they near light-speed and the time as observed from Earth, but considers survivability in terms of time and acceleration. It also makes the math simpler when all you want is a rough idea of whether a human body could withstand sustained acceleration to relativistic speeds within a human lifetime. Note that relativistic mass is a convenient fiction used to describe the additional kinetic energy and momentum required at relativistic speeds over and above those of Newtonian mechanics. As far as I understand, (Fermilab has a good YouTube video about this) relativistic mass is not a reality that the traveller would experience within their own frame of reference. Yes, there is the problem of what 'speed' to each observer means, as both times and distances vary for each observer. My approximate answer may or may not be right but I think it indicates that survivable acceleration to relativistic speeds is plausible within the traveller's lifetime subject to a suitable source of acceleration.

Accelerating at Earth's gravitational acceleration around 9.81m/s^2 you approach light speed of 3x10^8 m/s in 350 days if you have sufficient thrust and power. It's therefore survivable for a human body to accelerate and decelerate to relativistic speeds, turn round and return within a human lifetime. The dangers of micrometeorites at such speed is huge, and the source of thrust is beyond us at present. As for self replicating machines exploring, that's what the Fermi paradox imagined, wondering why aren't they here.

Hi Aberhound, You've clearly read a lot and retained a lot from your reading and synthesized a lot in your brain into a framework of mental models. I think there are some issues with the veracity of some of the things your reading has presented to you, however, which might require you to expunge certain points you've read about and reframe some of the mental frameworks you've created around them. It is a difficult process to go back and update one's mental models of reality, but it is worthwhile as you clearly have an intelligent mind capable of holding a lot of information, and I hope some background reading, perhaps in well referenced Wikipedia articles and their references, might help you do so. a. Military grade night vision devices (using photomultipliers) were <$1,000 in mid 1990s when Russia opened up. Now integrated digital imaging sensors are mass-produced (CMOS cheapest, CCD highest sensitivity), that performance is even cheaper in devices also capable of capturing the image (still or video) - military grade now is differentiated not so much by performance but by robustness, particular communications protocols etc. Consumer grade electronics is very capable now, but one must be aware of the limitations imposed by shot noise when interpreting what one sees when using night vision equipment. b. What's field control in this context. Which fields? Are you trying to say gravitational field control? c. Private sector rockets are improving in leaps and bounds. Space X for one. Legislation ahead of this is sensible, especially in light of international treaties drawn up in the 1960s when only nation states were considered capable of exploiting space. No need for an esoteric explanation, according to Occam's Razor. d. Lunar gravity is easy to estimate - don't need Gen Relativity, Newtonian gravity is fine. Let's see how it calculates... r = Radius of moon = 1,737,000 m M = mass of moon = 7.35e+22 kg m = mass of small object on moon, e.g. Apollo lunar module - at least 18 orders of magnitude smaller than M F = force of gravity acting between masses m and M G = Newton's gravitational constant = 6.674e-11 Nm²/kg² g = acceleration due to gravity = F / m F = G x M x m / r² Divide both side by m to obtain g = F/m, meaning that for small m, m doesn't affect g just like on earth. g = F/m = G x M / r² g = 6.674e-11 * 7.35e+22 / (1.737e+6)² g = 4.905e+12 / 3.017e+12 g = 1.63 m/s² Compare that to 9.81m/s² on earth, and it's 0.166 of it. Very very nearly 1/6th. The escape velocity can also be calculated to be 2,380 m/s, about one fifth of the 11,200 m/s for Earth. You can remove the word 'supposed' from your question - it checks out, though if you have any questions about the calculation do bring them up. Then remember that Apollo landers took off leaving behind the landing legs and platform at the bottom (no point needing to lift the extra mass). Despite the initial rocket exhaust hitting the platform, it still kicked up plenty of dust, but that doesn't won't hang in the air like on earth as there's no air. It still had to accelerate to a reasonable speed to match speed with the lunar orbiter, but didn't have any air resistance to overcome, just the modest gravitational acceleration to overcome, which lessens as you get further away (as r increases in the equation). For that reason, the rocket thrusters were designed for the lunar gravity - much weaker than the Saturn V - to produce a controlled burn calculated to leave the moon with the correct speed to catch up with the lunar orbiter. Timing of lift-off had to be within a certain time window so they'd reach the altitude of the orbiter at about the same place where the orbiter would be when they got there and could then use a small burn to complete the rendezvous. Anyone can 'admit to' something implausible that nobody is going to deny (or that they'd be keeping a secret). I could 'admit to' making a warp drive for the Nazis, having time travelled decades before my birth to produce it for them. Is there any evidence they used it? No - their testing determined that it was highly dangerous with the control technology of the time and it was never used in combat, but Werner von Braun took the technology to the US Government after the war and some of his colleagues took it to the Russians. Or am I simply delusional. Oh yeah, it could be that. Am I also a pseudoscientist like Viktor Schauberger who, while promoting some biomimicry ideas that are now used such as biomimetics - engineering inspired by the solutions evolved in nature, also invented supposed perpetual motion machines that appear without close analysis to violate rock solid thoroughly tested laws like the Second Law of Thermodynamics. I'm afraid one has to be extremely careful in looking into his writings if they go beyond mere observation of botany, however plausible they may seem. Although he was well-read he had no formal science education. The webpages about him are filled with pseudoscientific language about 'subtle energies' and 'quantum' bollocks. The alarm bells are ringing as if they were generated by a 'wisdom of Chopra' random 'pseudo-profound bullshit generator' I'm afraid. It's not to say all his writings are flawed, but you simply MUST verify carefully, before believing what he claims, which don't seem to have gone through any form of robust peer review or challenge. The Michelson-Morley experiment to measure the speed of the supposed ether was repeated many many times because the result was so astounding to what scientists has assumed must be the case. And the result always came out the same, showing there IS NO ETHER - no medium pervading space on which light waves oscillate as everyone had assumed there must be. This shocked physics in the late 1800s, hence the numerous replications to try to find the flaws in their experiment. This result and its successful replication many times over was a fundamental reason why Einstein looked at Maxwell's Equations and worked out their implications for space and time given that the speed of light in a vacuum was now shown to be constant regardless of the motion of the observer against the background universe. From this came the Special Theory of Relativity and eventually the General Theory of Relativity without which your GPS positioning would drift by kilometres per day and which has been extensively tested and shown to make correct predictions, whether in particle physics, atomic clocks flown on jumbo jets or GPS satellites, or in gravitational wave predictions for colliding black holes and neutron stars now shown to be amazingly accurate. There IS NO ETHER. It is thoroughly established physics tested tens of thousands of different ways. This discovery was a building block towards Relativity and Quantum Mechanics which are extremely well tested themselves and produce some highly unexpected effects in extreme conditions that turn out to be true and really observed in nature. I will not comment on the rest of your points which mostly rely on the existence of the ether, which is not something grounded in physical reality. If they were true they could have made the basis of some fascinating science fiction, for example. Toxoplasmosis is fascinating, and shows how the brain is reliant on chemical pathways and signalling and how evolution can happen across ways to 'hack' these mechanisms. It's fascinating stuff and leads scientists to great insights at times, but this truth is sadly more prosaic than your intuition that it could be down to transmission through the ether from great intelligences. I really hope you take this in the spirit it's offered as an opportunity to develop and update your thinking, as you clearly have a mind capable of working with a lot of concepts and should be able to replace the flawed concepts you've read about and think through the consequences of your updated thinking. It's not a bad thing to learn as an investor either!

The latest 13-F is now included in all three spreadsheets. You can enter your currency and number of shares in the blue cells near the top-left of the first Worksheet tab. I've also added a new tab to each spreadsheet called Look-Through Summary - which has a red stripe below the tab name. This is a somewhat simplified view of the Look-Through portfolio. Rather than re-calculate, it just grabs most of the info from the main sheet, so don't go entering your holdings on this sheet and expect it to work. It adds on the right hand side a couple of columns showing the Look Through earnings of your holding of BRK and showing each constituent stock's percentage of these earnings (just as column J show's its percentage of the BRK portfolio at current prices) I still include WABCO for now even though the position has now been sold and thus contains 0 shares. This version is the one nobody but I can edit. It contains instructions for copying them to your own private spreadsheet so you can edit to your heart's content: https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=292668837 This version is editable by anyone, but be aware that anyone can see your edit history, so if you enter private information there, it's potentially disclosed to the whole internet! It could also get corrupted by anyone! https://docs.google.com/spreadsheets/d/10gMfyZOFCW1-KrY_P8SGRf3pTstspdAGw_DuKSQxO8s/edit?usp=sharing There's another version that you may request permission to edit, here: https://docs.google.com/spreadsheets/d/1Um4ENkSz4tppynxqKAMVLrUcuNqn2JaVBBRu4CEVvGQ/edit?usp=sharing If you'd like a simplified overview of the BRK portfolio, I can recommend http://minesafetydisclosures.com/individual-investor-portfolio and for CNBC's Look Through, https://www.cnbc.com/berkshire-hathaway-portfolio/

Neil de Grasse Tyson in the entertaining video link above mentions that we should remember that the U stands for Unidentified, and not jump to the alien hypothesis. I have discovered that 'skeptic' fits my worldview better than most terms, and I'm a now a very small part of the organised Scientific Skepticism movement. I'm more aware of my own subconscious biases now than when I was a practising physicist. I should point out that true skepticism (unlike cynicism or denialism) implies willingness to accept evidence, but putting an appropriately high bar before accepting something that overturns the well-established position. On that basis I've overturned my initial doubts about Genetic Engineering (esp of food crops) and believe the Organic Food movement is largely in denial of the scientific evidence, as are many Green groups who conversely happen to be in accord with the scientific consensus with regard to climate change and global warming, although they may support poor policy approaches in many cases due to political or anti-capitalist biases. As a physicist I was forced to accept the overwhelming evidence that the strange worlds of quantum effects and relativistic effects, are really present in nature, and are important enough to matter in some particular set of situations that we don't consider part of 'everyday' world. Yet now, the everyday devices we use require relativistic calculations to stop our GPS position from drifting kilometres per day due to the gravitational field in which the satellites operate, wireless communication requires 'imaginary numbers' to do the math to understand it and semiconductors/lasers we use daily rely on counter-intuitive quantum effects such as tunnelling to work. It even seems that the extraordinary efficiency of photosynthesis in chlorophyll can only be explained because evolution found quantum effects that could effectively 'explore' multiple pathways simultaneously without breaking quantum coherence (collapsing the wavefunction). Returning to aliens/UFOs, it is interesting that phenomena such as sleep-paralysis, which affects 5% of people regularly and 8-50% at one time or another when the body's normal dream paralysis continues when the brain wakes up, could rationally explain many reports of alien abduction today as well as previous generations' Night Hags/incubi/demons sitting on the chest or abdomen preventing us from moving (and from the Old English word 'maere', we get the modern word nightmare) - which at the time would have made sense as a rationalisation to explain the very worrying phenomenon. Occam's Razor would tell me that's a very likely explanation for a large proportion of reported alien abductions. There are so many things that can be easily misinterpreted by the 'good enough to survive the African savannah' human visual perception systems we've evolved as a species - e.g. nearby slow-moving illuminated insects being mistaken for silent distant luminous fast-moving spacecraft being just one of many more likely explanations, which necessarily vary depending on the type of phenomena reported and the circumstances. In fact, the absence of sonic booms among craft performing such supposedly super-fast manoeuvres is another indication they're not the result of objects moving at such speeds as the witnesses often assume. That's not to say I don't expect intelligent life elsewhere in our galaxy of 100 billion starts or the wider universe of 100 billion galaxies, but the probability of contact may dwindle at the conjunction of the immense distances even within our galaxy, let alone to billions of others, and of the immense timescales (many such alien species may have lived and become extinct already, while others may be yet to evolve - our own time as a space-faring civilisation is less than a century old after about 4 billion years since the earth formed and cooled enough to have liquid water). We're only now starting to take the threat of asteroid impacts seriously. I can imagine a lot of promising alien species getting wiped out during their equivalent of what we'd call our pre-historic period. The ancient Romans, Greeks, Chinese and Aboriginals shared our intellect, for example, but lacked the technology to detect, let alone deflect an asteroid. The Fermi paradox does seem to make it unlikely that the distances and times separating sufficiently intelligent species are anything other than enormous. I could envisage us creating self-replicating machines that could mine asteroids to replicate, travel using solar sails, and relay messages among their fleet to communicate their findings back to future generations on earth or elsewhere, and for this to happen within a couple of hundred years, if not sooner. If we're close enough to achieving it, perhaps other civilisation could have achieved something similar long ago. Now, perhaps they'd only fly-by planets like Earth very rarely and very fast, and perhaps they broadcast broadband signals that are hard to distinguish from noise. Could that explain why we've tried to look for signs of intelligent aliens or their technology but haven't found them yet?

Just had a chance to look your figures over, LongTermView. I make it roughly $9,520 million of economic income from the investments - a difference of roughly $5,970 million over the GAAP income. It would probably be better to judge in February when the Annual Report comes out, then the ratio (currently 2.82) will be nearer to matching that based on the look-through earnings of the portfolio held for the year included in the Annual Report, also taking account of adjusted holdings. It would also be a bit out if massive new positions were purchased for cash, say, half way through the year, as only half a year's dividends would be received, while a full year's look-through earnings would be counted. Maybe one day I'll get round to using the YahooFinance import functions so I can also obtain dividend info that's missing from the GoogleFinance functions. This thread will probably help me do so: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/google-spreadsheet-tips-and-tricks/ Before I do that I hope to get time to include the latest 13-F in my spreadsheets.

misterkrusty, I don't think fill color is settable on a per-sheet basis, so you're having to format the cells rather than the background of the sheet. When you cut cells and paste them, the cells are cleared to the default formatting. It may be possible to use the script editor to create a custom function that will do the pasting then apply the formatting you desire to the cells left behind. There's some guidance here, if that's an approach that might work for you: http://www.mousewhisperer.co.uk/drivebunny/setting-cell-format-in-google-sheets-using-apps-script/

Very impressive work, SlowAppreciation!

I just read that on Seeking Alpha and also came across the following from Valuewalk which contained some interesting titbits (and a couple of typographical errors that don't really detract): http://www.valuewalk.com/wp-content/uploads/2015/01/Sees_Candies_Case_Study.pdf

Thanks, globalfinancepartners, I thought the numbers just added up to too much but it's nice to have that confirmed

Not totally on-topic, but the form SC 13G/A regarding the Beneficial ownership of Bank of America Corporation Common Stock raises a few questions. I wondered if anyone might be able to help be understand. https://www.sec.gov/Archives/edgar/data/70858/000119312517280738/d411721dsc13ga.htm As we know, Berkshire Hathaway Inc. (Delaware) exercised warrants to purchase 700 mn shares of BAC, representing 6.6% of the common stock at the time (6.7% now, presumably indicative of buybacks) The form also includes other entities that own stock, but none of these have been mentioned on the 13-F to my knowledge. For example: 4.6% (488.88 mn) by National Indemnity Co (Nebraska) 3.0% (311.78 mn) by GEICO Corp (Delaware) 2.2% (229.60 mn) by Government Employees Insurance Co (Maryland) 0.8% ( 81.20 nm) by GEICO Indemnity Co (Maryland) and plenty more, much smaller positions by subsidiaries, but it's over 17% of BAC common stock already. I believe >10% ownership would be in excess of the bank holding company rules (same as Wells Fargo, forcing sales as they buy back stock to stay below 10%). Could these be pension assets or something not beneficial to BRK shareholders? Or am I just getting confused by the layout of the form? The numbers just seem remarkably large to me.

Your share count is a bit off. The share count is 1,644,716.39 A equivalent or 2,467,074,578 Bs. So for the As BVPS is $187,435.36 and buyback threshold is $224,922.43 MV is $280,470. For Bs BVPS is 124.96, buyback threshold is 149.95 and MV is $187.27 It's not a big difference, but hey... you asked. Although it's splitting hairs, I see the discrepancy now. You used the shares outstanding at quarter end (from Note 19 on p21 of the 10-Q) I used the number of shares outstanding as of Oct 26, 2017 from the un-numbered cover page of the 10-Q, which is just a little higher than your number, but which I preferred over the average outstanding over the whole quarter, or the shares outstanding at the end of Q3, being more recent. Class A equivalent = 753,528 + (1,336,892,283/1,500) = 1,644,789.522 Class B equivalent = (1,500*753,528) + 1,336,892,283 = 2,467,184,283 That's a 0.0044% difference (44 ppm), so pretty much negligible, making a penny difference on a B share. I believe that the buyback threshold is supposed to be based on the last published Book Value (not a 'live book value' that hasn't been disclosed to the public), but not sure whether it's also based on the last published number of shares outstanding. To some extent using the number of shares from Note 19 would make sense (as would the more recent number from the front page of 10-Q), as the actual number of shares outstanding would decline as repurchases were made, boosting the threshold slightly, and the number of shares outstanding would not be public knowledge until a filing is published.

That's 11.3% CAGR in BV. I see that where I grabbed my figure from for convenience was actually 2015Q3 from a note I made in Feb, implying much the same CAGR.

Sorry I meant to write year end 2015 which is 1.75 years ago. I'll modify my post. Thanks for the correction to share count. I used the figures from p1 of the 10Q from 26 October but just plugged them in a spreadsheet. Maybe there's an error.

Book Value Per Share = Berkshire Hathaway shareholders’ equity / shares outstanding BVPS for BRK.A = $308,278 x 1,000,000 / 1,644,789.52 = $187,427 1.2x BVPS buyback threshold = $224,912 for BRK.A BVPS for BRK.B = $308,278 x 1,000,000 / 2,467,184,283 = $124.95 1.2x BVPS buyback threshold = $149.94 I make it 24% growth since Year End 2016, (edit - oops I meant 2015) i.e 1.75 years. That's 13% CAGR. I appreciate that's possibly helped by mark-to-market gains in BV, but it seems pretty high, albeit that such figure can be a little lumpy over a fairly short time period. Can anyone confirm my calculations?

I have a modest correction to make to some things mentioned in previous posts on these boards. I have on occasions referred to my original purchase of BRK.B (old) on 15 July 2003 at the post-split equivalent of $31.24 USD which I stated was not purchased at a huge margin of safety, but a fairly modest discount to IV. I track this purchase and compare it to the S&P500 Total Return index. An error has made me overstate my CAGR by about 1.4%. Having looked at a historical chart, this didn't look right and I've gone back to my annotated Ledger to check and realised this was in fact an error. The equivalent price post-split was $49.71 USD, and £31.24 GBP was the figure I'd used because I was comparing the price converted to GBP today with the price in GBP at time of purchase forgetting about the exchange rate change since 2003. The SP500TR figure I use was in USD all along. (My pre-split purchase price for BRK.B_OLD was £1,562.88 GBP or $2,485.42 USD at 15 Jul 2003 exchange rates and the 50:1 split happened in 2010) The decline in GBP (and strengthening of USD) since that time (USD:GBP has risen from 0.6284 to 0.7626), means that my returns expressed in USD over that time are slightly lower, and my outperformance of the S&P500TR from that tranche of BRK.B stock is lower too. I've now ensured I adjusted for exchange rates at beginning and end, and now show about 0.64% outperformance of the S&P500 Total Return Index in either currency. The London Stock Exchange FT All Share Index (not a Total Return Index) is also shown, but the dividend effect should add at least 2-3% . 15/07/2003 - 02/11/2017 performance of Original tranche of BRK.B BRKnow/2003 CAGR | SP500TRnow/03 CAGR Outperf | FTAS(noTR)/03 CAGR Outperf >USD 3.74733454 9.68% | 3.445877819 9.04% 0.64% | 1.689186155 3.73% 5.94% >GBP 4.54729521 11.17% | 4.181671811 10.52% 0.65% | 2.049875967 5.15% 6.02% I had previously compared the 11.17% CAGR, now on the second line, to the 9.04% CAGR on the top line in error, which was influenced more by +21% cumulative currency effects than by the +8.8% cumulative advantage that BRK has had over an ideal, cost-free, tax-free SP500TR tracker in those 14 years. The dividend reinvestment effect for S&P500 is also worth pointing out. Staying in USD for simplicity, using SP500CG to denote Capital Growth without dividends reinvested: The SP500TR has grown 3.45x over 14¼ years or so = 9.04% CAGR The SP500CG has grown 2.57x over 14¼ years or so = 6.83% CAGR The dividend effect has added about 2.22% to the CAGR over that time period. The FT All Share CAGR would probably need something around 2.0-2.5% added to give the Total Return CAGR - but historic data from 2003 on the Total Return Index is harder to come by for the FT All Share, so I haven't located accurate figures. Anyway, sorry if my incorrect figures misled anyone.

Wise words indeed in the last 2 posts. Are things different this time? I think some things are different, but not enough things to make me comfortable with the general level of market prices. And there are definitely things that make me nervous about the economy in this historically unusual period. For example, looking back over many decades, things are different now. We have interest rates at historically low levels and inflation at much more modest levels than most periods since the industrial revolution. We've had vast amounts of Quantitative Easing - has this merely delayed necessary adjustments to how economic participants behave? We have demographic changes too, including people living far longer past retirement, perhaps retiring later too, and lower birth rates in most countries than in the past. So looking over really long term historical charts, such as Shiller PE (CAPE), one has to be careful not to read too much into how the last 30 years have consistently seen CAPE well ahead of earlier averages when interest rates and inflation were very different. However, today's 31.56x level is clearly unusually high, albeit that it has risen higher in the past, and PE at 25.79x is also very high, especially if reported earnings are somewhat inflated above economic earnings or are juiced by the effects of cheap debt. Price/Sales at 2.20 at present is also worryingly high. It does seem that many market participants are projecting a rosy future or are seeking to jump into what has worked recently. I'd be quite uncomfortable holding, and very uncomfortable buying, stocks at such levels of PE unless I knew that profit was artificially depressed due to aggressive expansion cap-ex or something that was both producing growth in profitability and depressing current reported EPS (e.g. something like Amazon, on which I think I've missed the boat) such that my purchase price expressed as a multiple of non-growth earnings was much lower. I imagine it would be a stretch for me to buy companies at 15x normalised earnings, let alone 25x unless there's an exceptional reason, given that I'm seeking a substantial margin of safety. I'm also uncomfortable with certain sectors, such as Oil/Gas or Coal, unless priced very low, given that I can envisage that they could within a few years quite possibly enter a phase of inexorable, if admittedly gradual decline (at which point prices might become attractive from time to time) as more and more things such as power generation and modes of transport reach a cross-over where renewable energy+storage and battery electric vehicles in particular become lower cost first in terms of total-cost-of-ownership, then even in initial purchase cost in various situations. While this wouldn't wipe out the existing base of customers at once, new plant & new vehicles could decline rapidly, and we could see the installed base decline a lot over a decade or two with potentially severe impact on the market price of these fuels. I think the general level of markets is rather pricy for my tastes - in that it offers a low earnings yield - especially given the run up since 2016. My core individual positions, however, are not, in my opinion, egregiously overvalued - perhaps closer to fair value, particularly as I believe them to be superior companies to the general market. However, there are no tax implications if I sell, so I am fairly free to sell positions when they get pricy without worrying about giving up. Indeed I sold a great core holding, Halma plc at a P/E of 28.8 using the proceeds and cash held to go almost 100% Berkshire at 1.24x BV in Feb 2016. Despite the switch from a highish P/E to a very cheap P/BV, I'm actually only showing a 15.0% relative gain on that trade at present (and a little less if I include dividends foregone), as Halma's P/E is now an eye-watering 35.9 and its foreign earnings converted to GBP received a one-off boost by the increase in USD:GBP, EUR:GBP and other exchange rates after the Brexit vote to match the one-off 'gains' I made by having a portfolio invested in USD but converted to GBP at that time. I expect HLMA's underlying compounding rate to be similar to Berkshire's long term, perhaps a fraction lower, but surprisingly consistent, and would gladly buy back in if it reaches much lower P/E ratios in future. In comparison, I cannot see Berkshire declining as far as Halma could from here in a bear market, and I can see Berkshire benefiting from the cheap asset prices during such a bear market much more than Halma which does not look for opportunities in so many places. I also hold a lot of AAPL. At a trailing 12 month P/E of 19.0x (17.3x excluding cash per share, so an earnings yield of 5.3%-5.8%) it isn't unfeasibly pricy and lags the market P/E. It clearly has room to decline in a bear market, but it also has a good chance of very strong earnings in the year ahead, I believe. It's at a price where I can easily imagine it showing a substantial gain within the next year, especially if earnings are indeed strong. Should it do so, I will certainly have to consider whether I can justify holding it at all, or at least lightening my exposure, either switching to something else, or holding cash. On the other hand, a bear market or economic crisis could see a substantial decline too, perhaps to as little as 60% of current prices, wiping out most of my paper gains if I hold on. I also have a hard time estimating AAPL's compounding rate long-term, so this makes me want to limit my exposure especially as it gets more fully valued. I think it's moat is more durable than Nokia and Blackberry and my purchase price was sensible, but the higher the price goes, the more I am concerned that I would rather put that money somewhere else where I'm less exposed to potential loss. So, yes I'm nervous about the market and I'm prepared that I might see some red on my portfolio some time soon. But I'm not quite convinced I should sell either of my main holdings either.

Just catching up with this thread, but I think there's some chance of governments and central banks slowly unwinding the cycle of increasing debt by very gradually increasing interest rates (as the Fed has signalled and only gradually begun to implement, I believe), meaning that many corporations could need to plan to reduce their debt load before they next need to refinance if interest rates (and particularly longer-term rates) are trending higher. However, governments and central banks, don't only have corporate debt, worryingly high stock prices and similar excesses to worry about, so if price-inflation, unemployment or housing affordability became a problem for some reason, they could have a very tricky decision to make to fix one problem but which may have an undesired effect elsewhere. I'm sure something will go wrong at some point and we'll have a bear market and/or a recession, but I struggle to guess when or how badly.