.....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...
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.
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
Is the $70 billion dollars of float that you refer
to, located on page 22 in the PW report?
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
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.>>
<< I'm convinced this xcv50 is just putting us all
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
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?
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.