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Berkshire Hathaway Inc. Message Board

  • robertkennedy283 May 17, 2013 11:10 AM Flag

    historical growth

    Thru out its history, BRKA & B grow on average 21.9% per year. Please check this statement for yourself. With the built in diversity of the companies making up BRKB, I will continue to accumulate for a 50% position in my portfolio. Over time this is one impressive upward chart.

    Sentiment: Buy

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    • Guy's stop pumping growth rates from the days when dinosaurs roamed the earth.

      Listed below is the yearend, split adjusted, book value per "B" share, for the last thirteen years (yearend 2000 to 2012).

      { 26.96, 25.28, 27.82, 33.67, 37.22, 39.58, 46.85, 52.01, 47.02, 56.32, 63.64, 66.57, 76.14 }

      Grab some semi-log paper and plot the BV/s (log scale) vs Year (linear scale) and then draw the best straight line you can through the data. The best estimate of the compound annual growth rate is hidden within the equation of that line: projected BV/s = 25.07 * 1.0959 ^ (Yearend - 2000).

      The compound annual growth rate over the last thirteen years was: 9.6 ± 0.5 percent per year.

      And if you goal is to make 8% per year on your equity investments then, in my opinion, a price to book value ratio of 120% (9.6% / 8% ) makes sense. If you're willing to make less than that then go ahead and pay more.

    • I agree with everything you say except that 50% is too much to have in an asset you don't control. IMO
      Things can and do happen in this world and while Berkshire is strong, it is not invincible.

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