I have never, let me repeat with emphasis NEVER been able to predict the direction of the market in any particular year. In addition to this, I do not think that most (and “most” here should be translated as “anyone”) are any better than me.
That said what would you be willing pay for BRK-B under the following guaranteed five-year scenarios? Also, what would BRK-B be worth after these five year periods assuming the share count does not change? Why?
1. Book value per share grows 10% per year.
2. Book value per share grows 9% per year.
3. Book value per share grows 7% per year.
Just curious as to what everyone thinks.
Strat, I think that is partially correct, but, as with most variables, you have to ask *why* were interest rates falling? All assets did not rise as interest rates were falling, well before they reached -0-. In fact, many investment assets fell in value, other than those directly correlated with those very interest rates and whose values have an inverse relationship with the rate of interest. I think this thread addresses stock prices, which clearly did not rise as interest rates fell throughout the last decade.
Falling interest rates are also "supposed" to encourage borrowing and economic growth. This assumption is equally invalid when other factors intervene.
This situation brings to mind Taleb's point in Black Swan about the coin toss. Assume a fair coin. If a man tosses a coin 10x in a row and gets heads, what are the odds the next toss will be heads? The correct answer of course is 50%, because each event is independent. However, in the real world that may be incorrect. I've seen videos of people who can toss a coin so as to get heads every time, and there's always loaded dice.
You just don't get it. USG is a wonderful business, because Buffett owns it. Wonderful businesses are wonderful investments, regardless of which of their securities you buy. Also wonderful regardless of the macro picture, which it is not productive to think about. Only dummies worry about which way interest rates are going. Interest rates are going up because that's where rates go when they're too far down.
If you would just look in the scriptures, it's all there.
Assuming a given income stream, and a given rate of growth, davidyab is clearly correct in terms of the value of a financial asset where, for example, the asset is valued based on the prevailing 10-year Treasury bond rate. That's finance 101. However, we observe a very strong positive correlation between a decline in income streams across many asset classes, and a decline in the growth rate or negative growth rate in said income streams, where interest rates decline. Therefore, we can say with great confidence that when interest rates are at zero, the economy's in the cr@pper, econometrically speaking.
But he's fecund, you gotta give him that. Davey says he's not only 29, a self-made millionaire, but also has "raised 8 kids." You do the math.
Other times he's other ages, it varies.
I was wondering how long that thread could go without red bringing up the idea of what discount rate i was assuming.
And she never did
It's as if, it didn't, matter
It's great entertainment to have you folks here to teach us where Buffett and Munger are flawed.