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Berkshire Hathaway Inc. Message Board

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  • ASIANBUFFETT ASIANBUFFETT Nov 18, 1998 7:49 AM Flag

    Nebraska Cornhusker Football & BRK Corre

    As they say, the market will do whatever that's
    necessary to prove everybody wrong.

    Market
    prediction is useless. But, ceteris paribus, if we know
    something tangible is coming on stream in a substantial
    way, bang! you got the price up due to the increased
    demand for the safe stock.

    I am talking about
    BERK from a very Asian perspective. Almost without
    exceptions Asian stocks are lousy vehicles to ride to
    riches. Warren was right when he replied to a reporter
    who asked why he was not interested in seemingly
    underpriced Japanese stocks, you can't get rich by owning
    companies with historically low ROE.

    Somehow it
    seems like Asians have picked up their money-sucking
    ability from the Americans currently managing the
    Internet stocks or a host of other American rip-off
    stories in the stock market.

    The way I see it, the
    only difference between the American stock market and
    the ones in Asia is that, based on decades of facts
    and history, you can, ex-ante, make a decision that
    will not entail ex-ante regret, whereas in Asia, you
    can't. In layman's words, the difference is that you
    have one company in the US where you can invest in,
    but you can't find one anywhere in Asia.

    I am
    speaking not only from an Asian's point of view, but also
    from a stockbroker and stock analyst's point of view.
    In the field of stock-picking and stock analysis,
    Warren has no equals. I was a Wharton Scholar from
    1991-1993 (check with their annual directory from those
    years under the graduate program section).

    I am
    trying to compile a book in Chinese and have someone
    translate that into Japanese, on Warren and BERK. Half of
    the book will talk about past BERK stuff (nothing
    new) and the more interesting half will talk about the
    future, part of these I am sharing on this
    board.

    I was tremendously touched by Warren when I first
    learned about his investment philosophy back in 1987, my
    first year in the US. As I am preaching Warren's
    philosophy, those who listen are similarly
    touched.

    Imagine when the Taiwanese and the Japanese are touched
    and withdraw 10% of their bank deposits to buy BERK.
    These two countries are under no restrictions of
    capital flow.

    I have roughly calculated the
    Taiwanese savings. Ten percent of theirs will be equal to
    half of BERK.

    And don't forget that even if
    BERK is trading at 50-60 times earnings (PE), most
    Asians will not see it as too high a PE since we are
    used to useless counters like Amazon and Yahoo trading
    at ridiculously high prices. Truly, most people that
    I talked to in Asia do not see a PE of 50-60 high
    at all for a company that has returned 24.9% in book
    value p.a. every year for the past 33
    years!

    When the bigger Japanese funds move into BERK, BERK's
    traditionally low PE will be history.

    It's worth noting
    that the Japanese are traditionally patriotic and they
    believe one way to show that is to keep their individual
    funds in their local banks. But what happened in the
    past 8 years really woke them up. Retirees are making
    do with a mere 0.25% p.a. on their life savings! (A
    $100,000 can earn you only $250 per year!). No wonder then
    that there was a huge outflow of individual capital
    from Japan during the first half of 1998! My guess is
    that without any knowledge of the US stock market,
    they are buying into US bonds both for the higher
    interest rates and for the capital preservation (US
    dollars vs yen which may drop further due to the
    worsening Japanese economy).

    to be cont'd...

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    • <<The way I see it, the only difference
      between the American stock market and the ones in Asia is
      that, based on decades of facts and history, you can,
      ex-ante, make a decision that will not entail ex-ante
      regret, whereas in Asia, you can't. In layman's words,
      the difference is that you have one company in the US
      where you can invest in, but you can't find one
      anywhere in Asia.>> Are you saying that BRK is the
      only company in the whole damn world in which one can
      invest? You are a silly man. I like BRK as much as the
      next, but there are many fine companies in which we can
      invest. And if you have listened to Buffett like you
      claim to have, you would know that he has said the
      same, and does so with his actions.

      <<I
      was a Wharton Scholar from 1991-1993 (check with
      their annual directory from those years under the
      graduate program section).>> OK I checked, but you
      are going to need to help me out here. I could not
      find anything under
      ASIANBUFFETT.

      <<Imagine when the Taiwanese and the Japanese are touched
      and withdraw 10% of their bank deposits to buy BERK.
      These two countries are under no restrictions of
      capital flow.>> Has Greg been giving you something
      to smoke? We should have warned you about him. This
      is not going to happen. It is
      silly.

      <<And don't forget that even if BERK is trading at
      50-60 times earnings>> Which is it? One day you
      claim it sells at a pe of 10, and the next day it is
      50-60. And as it has been pointed out before, if you
      think the pe of BRK is important you do not understand
      this company.

      I still don't believe that you
      are real. Where is that sign I keep asking for?

 
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