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Berkshire Hathaway Inc. Message Board

  • jad1148 jad1148 Nov 1, 2012 7:30 AM Flag

    Glubb, Glubb, Glubb

    On a five year basis, berkie is now underwater.

    Oh, the humanity!

    Split adjusted closing Price per share:
    86.35 10/31/2012 - yesterday,
    88.28 10/31/2007 - five years ago.

    Today's, 11/1/2012, five year hurdle: 87.54.

    And, going forward, it only gets worse.

    The five year hurdle for Monday, 12/10/2012: 99.70.

    I'd bet that the folks who bought five years ago never dreamt they would lose money on it over this period of time.

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    • Jad, you are right, and had you purchased the shares in 1998, you'd barely be ahead after 14 years! That said, had you waited another year or two to buy after 2007, you'd have done quite well.

      Moral of the story: Timing is everything when it comes to your buy price. Don't overpay for even the best of companies. You weren't the only one arguing against BRK's supposed "value" in 2007. There were a few of us who agreed with you, most notably HC. That doesn't make BRK a bad hold, particularly if you owned it at much lower prices, and/or used options at opportune times to generate a return on your holdings.

    • mornin jad, you dont want to share that post with, expertsville ? lol, can i, as you know i LOVE getting jumped by the children of the brkville madrassa !! btw, where would brkb have to be to meet buffetts hurdle of at least up 5 % a year since 11/1/07, thanks bud.

    • The price is down, but compared to the S&P 500 over this time period it held up OK.

      I'm sure all those folk who bought five years ago would have picked big winners if they hadn't been lured by the mystique of BRK

      • 1 Reply to l_statland
      • I_statland & balt, I've waited five years for this quarter.

        A little bit of history. When the 2006 annual report was issued in early March of 2007 the koolaid klowns immediately declared BRK to be worth 177% of book value. They came to that conclusion by using the two column method. They multiplied $3,625 of pretax earnings per share by 12, added that to $80,636 of investments per share, and divided the result by $70,281 of book value per share. By the way, to the best of my knowledge, that's the same method WT uses.

        For the next six months I argued on both the BRK-A board and a moderated board that they were wrong. I used several methods to illustrate why that valuation couldn't be correct. I was verbally trashed for my efforts. I finally gave up the fight at the start of the 4Qtr. THEY continued to pump BRK until they had successfully pushed it out to an intra-day high of 195% of most recently reported BV (3Qtr) on December 11, 2007.

        Needless to say, the sellers made a killing at the expense of the naive buyers. I feel bad for the buyers, but what can I say? They voluntarily bought the stock based either on the valuation story or the momentum it created. But the sellers didn't win completely. Most had only sold their "traders", a small fraction of their total position. Their efforts during 4Qtr2007 would ultimately result in the trashing of their "core" positions (the shares they plan to hold forever). In 2011 WEB announced that he won't pay more than 110% of BV on a buyback, hinted that 110% might be 90% of true value (122%), and at the annual meeting this year volunteered that he would be a reluctant buyer at 115%. It would appear that there is some justice in this world after all. Please excuse me when I laugh.

    • baltbear Nov 1, 2012 3:59 PM Flag

      i'm confident u'd win that bet.
      on another hand, i can cheerfully kick myself for not buying 65 1/2..i credited the gop with more ability to tank the economy and never saw the buyback coming...was waiting for 62 1/2.
      on another hand, a willard victory could get me that 62 1/2...but that would be pricey.

144.45+0.51(+0.35%)Oct 27 4:01 PMEDT