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2013 10Q out


racemize
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Cost basis of investments in Banks, insurance and finance goes up by $760mn. I guess that would more purchase of WFC.

 

Unrealized gains are up by almost $9.5bn in 90 days  ;D

 

Banks, insurance and finance up $3.5bn

Consumer products up $2.6bn

Commercial, industrial and other $2.9bn

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Very good quarter.  :)  P/B is back to 1,35. Still more upside.

 

After Swiss Re reported strong reinsurance numbers I sold my IBM shares and bought back my Berkshire shares. Again 100% of my portfolio in Berkshire.  ;)

 

If at the annual meeting a question is asked about austerity it could be from me. I asked if austerity in Europe makes sense. 

 

Great to see Buffett and Munger talking. They are still the smartest.  :)

 

I would love to be at the annual meeting.    ;)

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Guest hellsten

I'm starting to think I need to start treating BRK.B as a cash substitute....it is near IV, but I don't think it'll fall thanks to the "Warren's floor", so not much downside.

 

As an owner of BRK, I'm thinking of BRK as a cash substitute, not a stock with a huge upside potential.

 

However, I've never understood the logic behind the "Warren's floor" thesis. IMHO, there's no guarantee that Warren will be able to keep the stock price up.

 

If the market falls:

- why would Warren buy BRK, if he e.g. can find better and cheaper stocks and companies to buy?

- would there not be more sellers than buyers of BRK, even if Warren buys all he can?

- I would sell BRK to buy other stocks if we had a repeat of 2009 and if I could find cheaper stocks. Would other BRK owners do the same and put even more pressure on BRK's stock price?

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How is BRK a cash substitute? Does it promise somewhat equal buying power as cash if the market drops? No. It will drop both in price and underlying book value if the markets corrects. Especially if the "floor thesis" is false, it can't be a real cash substitute. That floor was nice when the stock was closer to it's BV, now it's just not as certain.

 

I'll just assume that you don't mean it literally but just like it more than having cash rotting away in your portfolio? :)

 

It's likely still even better than a cash substitute if you buy a hedge against your BRK position as well, but that's another thing.

 

 

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Very good quarter.  :)  P/B is back to 1,35. Still more upside.

 

After Swiss Re reported strong reinsurance numbers I sold my IBM shares and bought back my Berkshire shares. Again 100% of my portfolio in Berkshire.  ;)

 

If at the annual meeting a question is asked about austerity it could be from me. I asked if austerity in Europe makes sense. 

 

Great to see Buffett and Munger talking. They are still the smartest.  :)

 

I would love to be at the annual meeting.    ;)

 

I'm probably buying more BRK this week as well.  The discount to my estimate of IV is still meaningful.

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Guest hellsten

I'll just assume that you don't mean it literally but just like it more than having cash rotting away in your portfolio? :)

 

Yes, if I was thinking of BRK stock as literally being cash then I would probably hold cash instead of BRK :)

 

With BRK in the portfolio at the price at which I bought it, I really don't care much about where the market is heading. If the market drops 50% and BRK with it, I can sell BRK and buy something cheaper. If the market doesn't drop, I can trust Warren does something better with the cash than what I would do.

 

That's I guess my reason for calling BRK a "cash substitute" when the correct thing to say would be "better than cash".

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Yeah I didn't mean it literally as a "substitute", I meant more of as a "stable value" portion better than holding cash, but without expecting a lot of upside.

 

 

I don't think "Warren's floor" is a hard floor, more like a trampoline. So in a sense, even if you break past the floor, even if he doesn't buy it back, you (and others) know that you're buying a security that is severely undervalued so I'm not expecting it to go down too much (even though as you noted, in theory it can).

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