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Berkshire Hathaway Inc. Message Board

  • DynamicAssetAllocator DynamicAssetAllocator Nov 17, 1998 2:09 PM Flag

    Nebraska Cornhusker Football & BRK Corre

    I am writing a thesis paper on the corrleation
    between the success of the Nebraska football program and
    BRK's price appreciation. My preliminary findings
    indicate that in years that Nebraska has been national
    champs or has been rated in the top three in the year
    end AP poll, BRK's price appreciation accelerated in
    those years and the following year. Years in which Big
    Red lost a national championship or finished with two
    or greater losses BRK underperformed its historical
    growth rate. As we all know Nebraska has lost three
    games this year, and if the past is any indication of
    the future, expect sub-par performance from BRK for
    the remainder of this year and next year.

    The
    retirement of John Osbourne very well may have grave
    implications for BRK holders going forward. All you BRK
    holders better hope that Big Red has a great recruiting
    season next year. Has the Nebraska dynasty ended, and
    will it signal the demise of BRK. These are the
    questions that I will address in my paper.

    If
    anyone would like to share their views on this hotly
    debated topic, please let me know. Serious inquiries
    only.

    As always,

    THE DYNAMIC ONE, a/k/a THE SOURCE

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    • I think that your paper is going to be not much worse than a lot of academic writings.

      Make sure that you calculate the R squareds and such.

    • <<I am writing a thesis paper on the
      corrleation between the success of the Nebraska football
      program and BRK's price appreciation.>>

      Work
      with Asianbuffoon to be sure you're using appropriate
      statistical methodology.

      <<The retirement of
      John Osbourne very well may have grave implications
      for BRK holders going forward.>>

      I
      presume you mean Tom Osborne, head coach of Nebraska
      football. I worry more about the retirement of W. Buffett
      or C. Munger, but I wish the Nebraska football team
      well.

    • if you don't, our educational system has slipped
      far more than I ever dreamed...

      Also, if
      you're writing a thesis dealing with Nebraska football,
      you might want to get the former coach's name right:
      it's Tom Osborne, not "John" Osborne...

      By the
      way, I've been reading some of the past posts on this
      thread to get some insight into whether to put a
      sizeable chunk of my portfolio into Berkshire shares, but
      have been disappointed to find so much crap to wade
      through to get anything of substance (welcome to the
      Yahoo board, I guess). I'm interested in any analysis
      folks would want to share, as well as an answer to this
      question: I thought that the A shares and B shares were
      essentially the same (with an obvious price difference), but
      I've noticed that their are daily percent price
      movements that are different, and am puzzled about it. Why
      is that?

      • 4 Replies to ecommerceman
      • eom

      • Yes, lots of junk on this board. The problem is,
        no one thinks that they post junk. (neither do
        I)

        price differences: they are small and happen because
        trades do not happen at the same time and the stock
        trades thinly (only a few shares a day, compared to
        intel or microsoft).

        You are right, A and B are
        equivalent in all meaningful aspects.

      • Imagine when these cash rich Japanese finally
        learn about this great man who really cares about his
        shareholders and who guards our capital the way some Asian
        girls guard their virginity.

        My book is expected
        to hit the shelves in at least two countries in Asia
        before the Annual Meeting of 1999. Hopefully the
        Japanese translation will come out within 1999. In that
        case, I don't see why BERK can't hit 100,000 before the
        end of 1999.

        Now, that's why I am saying all
        of us old timers should load up rather than buy in
        later.

        Of course I agree with Warren that the best case
        scenario is that BERK price goes up in tandem with the
        gains in intrinsic value. But don't forget that these
        Asian's family funds are now destroying their economies.
        It's a big joke when you talk about money. If you
        don't keep your money in the bank but hide it under
        your mattress, the stupid bankers won't lend it out in
        an indiscriminate fashion which finally causes
        financial crisis.

        Think about Thailand: more than
        40% of their banks loans are bad debts
        now.

        It's time conservative investors from Asia, especially
        those who don't want to see their money destroy their
        own country's economy, move into
        BERK!

        Remember we are not like half of Americans who find
        "refuge" in mutual funds. Asians tend to choose their own
        companies to invest in, and don't believe in mutual funds.
        BERK makes perfect sense to them. Having a traditional
        distrust of the mutual fund people's recommendations, we
        are very delighted to see a man like Warren who not
        only spurn these big-fee bums, but also outperformed
        them by a huge margin!

        As to why all investors
        in America -- except 70,000+ -- don't invest in BERK
        but find other stocks, and/or completely trust their
        mutual fund managers, I believe a quote from Warren
        himself would answer it:

        If there is nobody at the
        bottom, how can I be at the top.

        I wouldn't
        surprised if the number of Asian BERK owners greatly
        outnumber (but not outsize in shares, because of Warren's
        and other insiders' holdings) American owners. To
        find 100-200,000 Asians to invest in BERK in the next
        one or two years? I don't that as a big
        problem!

        Please, Warren, do not then allow Japanese or Chinese
        languages be used in the meeting. I am already tired of
        that when travelling in the states. I volunteer to be
        the spokesperson for the Chinese section of the
        shareholders, and I am sure there will in time be another
        volunteer from Japan.

      • 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...

    • "While BRKA only trades about 50,000 per day"

      Shouldn't that be 500 shares?

    • .........could NewBRK be considered for admission
      to the S&P 500 if the 1,000,000 shares of preferred
      stock were brought to market?......see page 74-75 of
      the NewBRK prospectus.....I've always wondered about
      why NewBRK preferred stock was
      included.........there's a reason for it.........but. like many of WEB's
      moves, it's wisdom is not apparent until later on down
      the road.......the beat goes on.........bobo

    • I wasn't sure about the scale either. In Yahoo in the table summary of daily closing prices and volume, 50,000 seems to be the right average daily volume. Then again, maybe Yahoo has it screwed up.

    • Here's some advice. You can take it or leave it.
      You obviously have a lot to say. Why not find a nice
      cabin, say in Montana (I hear that Casa Kazinski is
      available), and go there and complete your BRK Manifesto.
      Then when you have it all organized and thought out
      you can present it to the world.

      Giving it to
      us bit by bit in the venue of this message board
      isn't helping anyone out. This stream of consciousness
      stuff is hard to figure out and you're beginning to
      repeat yourself.

    • <<<I don't pretend to be an expert on
      what S&P will or won't do, but it seems to me that the
      focus on the number of shares traded misses part of the
      picture. GE currently trades about 6.4 million shares a
      day at about $90 per share = $576 million total
      dollars traded per day. While BRKA only trades about
      50,000 per day (currently inflated), at $67,000 per
      share, total value traded per day is $3.35 billion. I'm
      sure current GRN shareholder trading will drop post
      merger, but even at currently inflated trading levels,
      only about 300,000 shares per day at $230 per share =
      $69 million are traded. Difficult to make the case
      that GRN should be listed while BRK isn't. Of course
      trading levels will increase significantly if BRK is
      listed. Only time will tell.Best of success!
      >>>

      Martha, I agree with your way of thinking, but you made a
      mistake. Daily volume of BRKA is 500/day, BRKB about 2,000
      per day. That gives a volume of about 30 million
      dollars per day.

      The numbers are skewed by the GRN
      transaction, because before it the traded volume per day for
      BRKA was about 100 shares per day.
      That's close to
      about 6 million dollars per day.

    • Yahoo tables are screwed up. WSJ indicates 500 is
      the right scale for average volume. Restating early
      argument: GRN = $69 milllion daily volume, BRKA = $33.5
      million, BRKB = about $22 million. Total about $125
      million plus increase in volume post listing. Not as
      compelling as the same argument with a few more zeros, but
      we aren't talking nickels and dimes either. I assume
      S&P would announce the listing almost immediately
      after the merger. Anyone familiar with the process?

    • Where did you hear that Buffett wants to buy HB? Is it just speculation or is there some factual basis to it?

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