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Berkshire Hathaway Inc. Message Board

  • bobo21029 bobo21029 Mar 3, 1999 12:27 AM Flag

    ABC did a good job.......

    .....with the Buffett piece IMHO.......the PW report, the OID excerpt and tonight's interview would seem to indicate that WEB really wants to get his message out......the beat goes on...

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    • You read the book but you try to time the market
      by selling your shares? Mr. Buffett believes that
      shares of companies are small piece of the companies. He
      often says that either you start out as a Graham & Dodd
      investor or you're on the other side. And it's very hard
      to change. Thank you for your wish, but most of us
      here didn't invest our money and hope for good luck.

    • Yes. It is $94,375 less $23,800. But this is the valuation of the growth of float, not the float itself.

    • Elias,

      WEB explains all the time that
      there are going to be years that BRK will take a loss
      in underwriting. He has talked about much larger
      figures than $275 million dollars. The total float that
      BRK has with GRN is $23,800,000,000. If BRK has
      exposure to 77% of the $275 million it equates to .008897
      percent of current float.
      WEB understands that large
      hits will affect earnings from time to time. I am not
      saying that this trivial but needs to be viewed in
      context.

      Is the $70 billion dollars of float that you refer
      to, located on page 22 in the PW report?
      AUBV

    • This is an excellent book that describes his
      investment style and his reasoning behind buys and sells.
      I'm just offering info. I believe the stock will fall
      back down until earnings are released. I'm just happy
      to have sold, because who wants to hold a stock that
      goes down on a day when the rest of the market is
      having one of it's best days ever. Always be
      imaginative, Buffett believes it and so should owners of BRK.
      Good luck. P.S. I'll be back in before earnings are
      released!

    • xcv50 says <<To name a few, Coke and Disney
      experience negative growth and Alice S. touted BRKA as 91000
      stock. I think this is quite irresponsible (unethical?)
      on her part. Perhaps she was pressured by Painwebber
      to do so. Someone (institutional holdings of General
      RE) really want to dump BRK at a much higher price.
      Tell this to the people who bought above 70000 last
      year. They really feel the pain caused by the pump and
      dump people last year.>>

      Dumpbill says
      << I'm convinced this xcv50 is just putting us all
      on.>>

      To cast any doubt on the validity of the PW report
      seems to smack of political incorrectness on this
      thread. So let us look at some aspects of the valuation
      of BRK in the PW report.

      PW put a valuation
      of $70 billion on the value of BRK to grow float, an
      absolutely incredible and unsupportable amount. An amount
      that demands that everything go well forever and ever.
      And what happens? The report is barely out and we get
      this: "Cologne Life Reinsurance Corp. of America, which
      last week announced a surprising $275 million pre-tax
      charge to cover losses on its U.S. workers' compensation
      business" . The PW valuation of growth depends on their
      assumptions for (1) the rate of growth in float, (2) the
      ability to earn a certain return on such float, and (2)
      the cost of float. I don't know what year BRK will
      book this $275 million charge, and I don't know what
      percentage of this loss is applicable to BRK, BUT, within
      mere weeks of the report a huge example of the danger
      of predicting future underwriting results - the cost
      of float - has been given. Events in the real world
      wasted little time in calling the PW assumptions into
      question.

      Another example? From the third quarter
      BRK shareholders' report discussing "Berkshire's
      other diverse direct insurance activities" we get "For
      the first nine months, premiums earned by these
      direct insurance businesses were $247 million . During
      1998, other direct insurance businesses collectively
      produced net underwriting losses of $10 million for the
      first nine months compared to net underwriting gains in
      1997 of $27 million for the first nine months. The
      decline in comparative net underwriting results during
      1998 periods primarily reflects the effects of
      increased underwriting losses from international auto
      insurance, increased claim costs associated with traditional
      commercial motor vehicle insurance, and lower underwriting
      profits from specialty risk insurance." Now these are the
      non-reinsurance, non-GEICO insurance operations of BRK; operations
      that have been owned and operated by BRK for many
      years. These are companies that have been subjected to
      the effects of BRK ownership and are operating under
      the direction of long-standing, Buffett selected
      managers. These are small but actually excellent
      businesses. And what has happened in 1998? For the first nine
      months of 1997 they had underwriting gains of $27
      million, and in the first nine months of 1998 have
      underwriting LOSSES of $10, a $37 million change on revenues
      of $247 million in premiums. I am not bashing BRK or
      these businesses here, but pointing out how volatile
      and unpredictable underwriting results can be even
      for excellent companies like BRK. Paine Webber for
      some reason known only to them is blind to the risk in
      the ability to maintain and grow float at
      satisfactory underwriting rates.

      So to question what
      the hell PW is doing when they put a $70 billion on
      the value of the ability to grow float and what the
      hell PW is doing by putting totally unrealistic
      valuations on BRK is to me quite valid.

    • Mark Twain wasn't an investor, he was a writer.
      Mr. Buffett never credited his success due to any
      luck. He stresses the importance of research, investing
      within one's cycle of competent, paying a reasonable
      price, and holding on to them for a long term.


      Where is luck in all of that?

    • I looked and see nothing for buffett--munger 2 or 3 hundred sold but he does it every year

    • Buffett has said that himself; however the harder
      you work the more luck you ususally have... to quote
      Mark Twain. If you really believe that investors don't
      need luck you should put your money in a money market.
      That way when your "investment" goes belly up you
      won't be crying about it here.

    • <<First, you're not "scaring" anyone here, and second, we don't need luck, we're investors.>>

      Well put.

    • First, you're not "scaring" anyone here, and second, we don't need luck, we're investors.

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