Why the sell-off?

[zarley]

So, BRK.b is down close to 10% today and around 25% just this month.  I bought a little bit yesterday at $2,400 and am considering buying more if things go much lower.  But, I'm trying to figure out what is happening and why are people dumping?  Any theories?

 

* Fear that Wells Fargo and GE may get nationalized or otherwise go to zero.

* Indiscriminate dumping of financials and insurers

 

One observation from the TMF board is that the A/B conversion ratio is well outside of normal and that an 'A' holder could sell, buy back 30 'B' and pocket close to $6,000 in cash.  Obviously it looks like the selling is forced/panicky and that the conversion spread is unsustainable. 

 

Who's selling?  Why?  Can it really keep going down, given the already huge discount to value?  Other thoughts?

 

 

[omagh]

I think that a better question is at what price does Berkshire start buying in shares?  My last significant purchase of BRK was in Feb 2000 when the A shares touched $45K.  At that time, Buffett announced publicly that Berkshire was considering buying shares.  Here we are 9 years later, and a similar timing/situation is occurring.  I expect that we will see an announcement from Berkshire shortly.

 

So, BRK.b is down close to 10% today and around 25% just this month.  ...

 

Who's selling?  Why?  Can it really keep going down, given the already huge discount to value?  Other thoughts?

 

 

[Alekbaylee]

I think all the reasons you cited are valid, there's a broad sell-off right now everywhere in the globe. Markets are getting crazy, no direction whatesoever.  :-\

[Vizi1]

I think that just like the market was out of hand on the upside, we are seeing the same type of reactions to the downside.

 

The market may be finally starting to realize the true debacle that the market has been for the past several years.

 

We are seeing the truest distinction between investors and speculators IMO.

 

I have found it difficult to hold onto the cash I had set aside for this kind of drop, but now I am kind of glad that I did.

[nsx5200]

I'm not sure how much leverage(margin) other gamblers are still using out there, but a minor dip in general stock price could cause margin calls, and turn those minor dips into bigger dips.  It's very likely that since Berkshire hasn't dipped as much as the other stocks, people are liquidating it to cover their margin.

[Guest ericopoly]

Volume today:  11% of outstanding Wells Fargo shares traded today.

 

Berkshire on the other hand, had a light trading day -- only 175,962 B shares and 5,509 A shares.