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Berkshire Hathaway Inc. Message Board

  • jzz0885 jzz0885 Dec 13, 2007 9:06 PM Flag

    why the stock falls - what goes up and too fast...

    will go down. Remember NASDAQ in 2000? Are we seeing 5000 any time soon? Buffet is great, but if the stock is hyped up like that and then falls, it's not his fault. it's the fault of those trying to get on the bandwagon and making an additional 50 bucks EACH day on the $5000 he puts down. Any abnormal returns will go back to norm. That's basic economics.

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    • Something to think about.

      "Value Line" values Berkshire at 1.6 x Book value per share.

      According to my calculations book value as of 9/30/2007 was: $77,482 per "A", $2,583 per "B".

      With that in mind consider the following:

      My first and worse BRK-B trade:
      09/28/1998 Bought "x" share(s) @ $1,978 {P/B = ~1.995}
      04/08/2003 Sold "x" share(s) @ $2,305 {P/B = ~1.624}
      Holding period = 1,653 days = ~4.526 years
      Annualized (pre-expense, pretax) return = 3.4%

      My last and best BRK-B trade:
      02/17/2006 Bought "x" share(s) @ $2,897 {P/B = ~1.464}
      12/12/2007 Sold "x" share(s) @ $5,020 {P/B = ~1.944}
      Holding period = 663 days = ~1.815 years
      Annualized (pre-expense, pretax) return = 35.3%

    • Your thesis that "the stock is hyped up" suggests that the price of B shares is driven by the market independent of the price of A shares, which is contrary to Buffett's memo of February 2, 1999 under the heading The Relative Prices of Berkshire Class A and Class B Stock http://www.berkshirehathaway.com/compab.html

      In it you will see that the price of B shares selling at a premium to A is controlled by arbitrage such that B sell at 1/30th when at parity or at a slight discount.

      Not a lot of "pumpers" around a the $150,000/share level in my opinion

      • 1 Reply to jgcoutts
      • Actually, I am talking about both A and B shares. From Oct to the end of Nov. both A and B shares have gone up over 20%, with A share from 12000 to 15000 and B share from 4000 to over 5000. What's behind this? What we saw is a sudden surge of articles and research papers hyping this stock. 20% for two month? Is this sustainable? This very much reminds me the tech maniac of the late 90's. Anything that is too good to be true is normally really so. Stay away and if you can sell, please do so before this one falls below 3000. Again, no offence to venerable Buffet. It's out of his control.

 
BRK-B
136.89-0.50(-0.36%)Jul 6 4:04 PMEDT