Valuebo

Am I mistaken or did wellmont post a reply on my post concerning BBRY? Or was it valueinv? Anyway, it's gone now and am wondering what happened to it. On another note, can someone explain me Prem's opinion on commodities versus his holdings like SD? He posted a commodities list again this year in his annual letter; oil was included. How does this compare to his position in SD? Is it a hedge of his hedge (best value in oil/NG coupled with hedged production)? Or does he see significant value in NG despite his expectation of lower oil prices when the sh*t hits the fan? TIA.

Just read it on Bloomberg. Also: edit: http://deadspin.com/explosions-reported-at-the-boston-marathon-473008941

Thanks. Maybe BB's security was a moat a few years ago, now it probably only attracts CIO's etc who don't have a clue about securing their androids and iphones. As far as I've read, securing those last two is no problem these days. Or is the extra cost involved that high? If BB has anything going for it, it's the keyboard on the Q10 and other future phones. Plenty of people just prefer a real keyboard. I also don't get Prem's argument on the future growth of the smartphones market. Isn't this something like the growth in airlines etc in the past? While the growth has been huge, most of the industry has suffered a great deal. He might be right in the shorter term, but won't most players get crushed by the fierce competition over the long term? Why will BB be a winner with only 5% of the market in it's hands? What will be the moat that keeps margins high enough in a few years? Or is Prem just convinced of the turnaround, likely followed by it's ultimate decline in xx years?

Really...? :D

Definitely. This combined with short-term elected governments can lead to major future problems. Grantham is also saying that we focus too much on technological advancement because of our relatively short history of prosperity and growth since the industrial revolution (so 200 years) where this was a major helping factor to overcome any problems on the way. Overconfidence in this technology could eventually be what causes our global civilization to "extinct" just like any other civilization in the past. At least, that's his opinion. I'm just agnostic on the whole thing but find it fascinating.

Nothing is predictable on this subject. Even for food production, alternatives and increased production thanks to technology can be found. Take this article in a Flemish newspaper: http://www.mediargus.be/flanderstoday.admin.en/rss/53286368.html?via=rss&language=en&utm_source=buffer&buffer_share=b2ccb

So BRK growing 15% a year after obtaining $360b BV in 2017? So in 2022 Berkshire's market cap will be something of one trillion (1,xx times BV)? Where is that insane growth going to come from? Some very large (future) subsidiaries would have to grow by 20-30% annually just to compensate for all the slower growing parts of Berkshire. Just not going to happen imo. In 5 years, 2-3% above S&P500 growth would be very very good but given the safety I'd be happy with the smallest outperformance if I was holding it then. FFH will get it's lumpier returns that could average 15% over time but BRK is going to slow down even faster than last decade. I bought more FFH recently at $360 and am hoping it stays down a little. Stock performance wise, this week was probably the best in years for Fairfax. :) 15% of portfolio now, would double or triple position if the deal got better.

Congratulations! This is an amazing community to be a part of, thank you. I was 12 when Parsad and his friends started posting so consider me a fellow grasshopper. ;o

I thought that was a somewhat silly comment. While financials aren't very leveraged now, they are far less safe than Berkshire. Expected returns say little without including risk.

Which, by accident, is $10 million in today's world adjusted for inflation. I'm very confident that he would pull it off. He was extremely talented and driven then already and now he has an additional 50+ years of experience to do the same in a somewhat harder market (questionable?). I would actually be surprised if he didn't get more than 50% annualized over a 5-10 year stretch unless markets became overvalued everywhere.

Nice quarter. Bought more this week and will be adding if it remains around BV. I believe there is a recency/past bias at work here making people believe that this stock won't bunch much anymore unless the market drops considerably. Returns will be lumpy.

Then we should probably all buy DJCO aggressively after market corrections. 8) This is actually what Munger has been doing with DJCO for some time now.

Very good points and great info twacowfca. The whole "without Buffett, BRK will do a lot worse" discussion is getting old imo. Statistically he even has another 6-7 years left! @ Gio: Outperformance of the business in the future is one thing. You are leaving out another important factor for good investor returns: the price you are paying! Return on our investment is what should matter, not the degree of business outperformance. Current share price of BRK has put little value on future growth, if any. While BRK is huge, many businesses have plenty of growth potential left. It's not like you are buying a $250b+ (+- intrinsic value) company with a few divisions in one general sector.

Agreed twacowfca. I was very very long financials (and BAC in specific) one year ago as it was very easy to see all the hatred and uncertainty and that betting against that was likely to pay off well. After a great run-up, I can't be as certain about my analysis and prospective returns. MoS is a lot smaller now so it doesn't make sense to hold the same amount, especially since I don't have to pay taxes on my profits. If it takes 4 years for BAC to double, then BRK might have grown at 8% per annum. If you believe current intrinsic value is $175,000 per A share, then it will be worth almost $240,000 by the end of 2016, which is almost a double from current prices!

It is just a general notion I am picking up on, like the 'TBV by Christmas'. "Everyone" and "linear" are to be taken with a grain of salt. ;) I'm just saying it's very unlikely that there isn't going to be plenty of volatility in the next few years so having cash or alternatives makes a lot of sense. Of course, if you don't care for opportunistic trading, then you probably shouldn't care all that much.

I believe BRK is easily worth 30% more. price/BV is closer to 1.2x atm, maybe 1.25x. The market has underappreciated the excellent safety and high quality this gem offers. Everyone seems to believe BAC will go up to $20 in a linear way in the next 2-3 years. It might but things rarely go as expected. Given the current market level, uncertainty and lesser quality of BAC and others (nothing can compete with BRK after all...), it can definitely make sense to be heavily positioned in BRK (or FFH for that matter). Not that BAC, AIG, ... aren't great value atm, they just bear much higher risk so they require a higher potential return.

I don’t agree. “We continue to maintain our equity hedges and have cash of approximately 33% ($8.1 billion) in our investment portfolios as we are not being adequately paid to take risks with markets at current levels.” In the meantime, the combined ratio has fallen to 95.4%. While not being adequately paid to take risks with markets at current levels, my own firm is focusing on improving its operations. Staying very defensive with its investments and hoarding up cash. The same is true with FFH, and obviously I like this policy. I don’t judge a quarter by the amount of earnings declared, but by the strategy put in place. giofranchi I'm confused. Is this some kind of devious "double sarcasm" post by Giofranchi? :O

And we all know it doesn't work that way in the stock market. If the stock drops, you have nothing! Oh wait... Anyway, prices here are much higher than $10,600/acre. But I guess a lot depends on the country, commodity & prices, government subsidies, ...

Awesome, thanks Parsad. By coincidence, today I noticed how terrible BRK stock has been performing these last few days. It is really remarkable how little recognition this gem is getting a year after Bufett's stock buyback plan. Even after a nice run-up, it remains one of the best values out there imo!

Already posted here earlier this week but thanks anyway. ;) Like someone said before, he would have done great if he bought more. I personally don't mind buying more aggressively as long as the fundamentals don't change but I have noticed that generally I'm way too early. When I buy a stock and it drops another 10% I get all excited, only to see it drop another 20%+.

Just buy 10 and expect more variability in your results. Risk as defined by beta will be higher but risk as defined by long term performance should stay the same. BeerBaron Wouldn't try that with the small caps tho. Chances are you get a bad run for two or three years with a couple of zero's, making it very hard to come back. Diversification doesn't seem an option here but a must. I'm also not sure whether a beginner should try this. Magic Formula investing has the name of being very hard for most people. You really need the right temperament. Most people can't stand a 30-40% drop in their portfolio and are very likely to screw up their basket of magic stocks. I would try to find out whether I have the right temperament first if I were a complete novice. I personally consider trying it once I have $50,000 to spare for a separate portfolio. Would want a net worth in stocks of at least another $150,000. Only then can you easily ignore what those 25/50 stocks are doing. Wouldn't like the idea of those stocks being my only exposure to the market as it increases the risk of doing dumb things.

Found that sentence hilarious as well. Almost thought it was due to my poor English skills. :D

Three weeks without internet? Quite the rehab! Have fun in Spain!

Markets became more efficient but mispricing will always exist due to our emotions, biases and specific misunderstandings. Fun fact: As late as 1975, WEB's Berkshire was trading for a record 60% discount to book and 3 years later you could still buy it for a discount to book. Even after BRK good in the large cap area, we saw two or three very obvious mispricings for the stock in the last 15 years. The same goes for a lot of other companies with great management. I think we are far away from a truly efficient market, but I'm sure you agree! :)

http://www.nytimes.com/2003/10/12/style/biting-the-silver-spoon-that-feeds-him-on-film.html?pagewanted=all&src=pm ;D