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Berkshire Hathaway Inc. Message Board

  • 8blue 8blue Sep 9, 1998 5:22 PM Flag

    Buying a Cult

    My concern with BRKa and BRKb is that we are tied
    into the top two people, both of whom are - shall we
    say - getting up there. I read in the notice of the
    General RE action that one of the risks discussed is the
    danger to the stock if WB is "unavailable." I believe
    when he and Munger go, the stock will plummet. What is
    being done to avoid that, or do they care? (Why the
    heck should they - they'll be gone!) My other concern
    is with major catastrophe coverage. This looks like
    it is going to be a bad hurricane year - what does
    that do to us?

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    • .. GRN and BRK shareholders vote next week.
      ..
      THe EU makes its decision on the merger 9/20/98.

      .. I am not sure when the IRS makes its decision but
      the merger has a viable alternative plan should the
      IRS complain.
      ..YES!! Let's get this show on the
      road and get the GRN float into Buffetts hands while
      this market is gyrating down.
      ..Does anyone know
      exactly when Buffett will get his hands on the GRN float.
      Is it after all the voting approval, EU approval and
      IRS approval or is it when the actual conversion of
      GRN to BRKA and BRKB occurs weeks or months down the
      line, ie. sometime in the fourth quarter
      ?????

      ..In the 1997 Annual report Buffett says about Market
      fluctuations: (I know this has been posted before but its nice
      to be reminded of these statements again and again
      in this volatile market.)
      "A short quiz: If you
      plan to eat hamburgers throughout your life and are
      not a cattle producer, should you wish for higher or
      lower prices for beef? Likewise, if you are going to
      buy a car from time to time but are not an auto
      manufacturer, should you prefer higher or lower car prices?
      These questions, of course, answer themselves.
      But
      now for the final exam: If you expect to be a net
      saver during the next five years, should you hope for a
      higher or lower stock market during that period? Many
      investors get this one wrong. Even though they are going to
      be net buyers of stocks for many years to come, they
      are elated when stock prices rise and depressed when
      they fall. In effect, they rejoice because prices have
      risen for the "hamburgers" they will soon be
      buying.
      This reaction makes no sense. Only those who will be
      sellers of equities in the near future should be happy at
      seeing stocks rise. Prospective purchasers should much
      prefer sinking prices.
      For shareholders of Berkshire
      who do not expect to sell, the choice is even
      clearer. To begin with, our owners are automatically
      saving even if they spend every dime they personally
      earn: Berkshire "saves" for them by retaining all
      earnings, thereafter using these savings to
      purchase
      businesses and securities. Clearly, the more cheaply we make
      these buys, the more profitable our owners' indirect
      savings program will be.
      Furthermore, through
      Berkshire you own major positions in companies that
      consistently repurchase their shares. The benefits that these
      programs supply us grow as prices fall...
      At the end of
      every year, about 97% of Berkshire's shares are held by
      the same investors who owned them at the start of the
      year. That makes them savers. They should therefore
      rejoice when markets decline and allow both us and our
      investees to deploy funds more advantageously.
      So smile
      when you read a headline that says "Investors lose as
      market falls." Edit it in your mind to "Disinvestors
      lose as market falls -- but investors gain." Though
      writers often forget this truism, there is a buyer for
      every seller and what hurts one necessarily helps the
      other. (As they
      say in golf matches: "Every putt
      makes someone happy.")
      We gained enormously from
      the low prices placed on many equities and businesses
      in the 1970s and 1980s. Markets that then were
      hostile to investment transients were friendly to those
      taking up permanent residence. In recent years, the
      actions we took in those decades have been validated, but
      we have found few new opportunities. In its role as
      a corporate "saver," Berkshire continually looks
      for ways to sensibly deploy
      capital, but it may be
      some time before we find opportunities that get us
      truly excited. "

      Url to the annual 1997 report.
      If you haven't read it bookmark it and read it at
      your
      leisure.
      http://www.berkshirehathaway.com/1997ar/1997.html

    • This ain't no mutual fund. Under no circumstances
      will
      fractional shared be issued. You should receive cash
      for
      the fractional share you would be entitled
      to.

      Since you must also own whole shares of GRN, I
      assume
      that you have 25 shares which yields 25*.105 = 2 5/8
      BRKB.
      You would receive 2 BRK + some cash. If you want to
      end
      up with 3 BRKB you should but another 4 GRN,
      since
      (25+4)*.105 = 3.045 BRKB.

    • ..........I think we're going to luck out this
      year.......North Carolina took a moderate hit with Bonnie [$256
      million total claims] and we're over half way thru the
      season...... now, our odds get better with each passing
      day....... BTW........long term, things are changing in this
      area with increasing regulation on ocean front
      building. In some places down in the Carolinas, if you get
      wiped out... too bad. You won't be allowed to rebuild,
      and this should lessen storm surge damage in the
      future.

    • web (& i believe munger) have heirs who stand to
      inherit stock & therefore would care about the price
      beyond their own time on earth. besides which, these
      guys have spent their lives working to grow this
      company. i don't agree that they have no concern for what
      happens after their death.

      would stock plummet
      when they go? yes, i believe so. i also believe that
      the older they get, the less premium will be built
      into the price that we are paying for their genius
      capabilities. there is a sort of underwriting mortality chart
      built into the stock. at least that's my theory.

    • According to Mr. Buffett, successors to the
      throne have already been chosen and they know who they
      are. Only Mr. Buffett's inner circle apparently know
      who they are. We, the public on the other hand, have
      no clue.

      JimC
      The Toronto Investment
      Club
      http://torontoinvest.ndsn.com

 
BRK-A
188,124.00-3,592.00(-1.87%)Jul 31 4:01 PMEDT

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