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Berkshire Hathaway Inc. Message Board

jad1148 84 posts  |  Last Activity: Aug 28, 2014 9:30 PM Member since: Dec 8, 2002
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  • jad1148 jad1148 Aug 28, 2014 9:30 PM Flag

    Congratulations! Twenty pounds in three months is really impressive. You are doing EXACTLY what my doctor is asking me to do. If I lost half that much weight in twice the time my doctor would be thrilled.

    So it looks like WEB is getting 9% on his 3B$ participation on the BKW deal. If nothing else that reconfirms that he is still using a high discount rate and goes a long way, in my opinion, in explaining why his buyback threshold is so low.

    If I remember correctly, there was a time (around the Gillette or Duracell deal?) when WEB couldn't stand to be in the same room with the PE guys (Henry & George?) and now he has become best buds with them. Oh well, that's why I try not to have heroes anymore, they all disappoint eventually.

  • jad1148 jad1148 Aug 28, 2014 10:29 AM Flag

    Thanks for the heads-up, hc. This is the first time I've heard of him. I couldn't find the interview, but on your recommendation, I did read, and enjoy his most recent blog: « Rickards: Stock market reality check ». Based on feed-back from my two sons (both in their twenties, high school graduates, some college, they did opted instead for technical programs: electrician & culinary arts), his comments on jobs is on the mark.

    By the way, I'm not on my deathbed yet, although following my doctor's orders: eating a low carb diet and riding an exercise bicycle while reading a large print book, isn't exactly my idea of living either. I am bored to death with the market and equities. I'm in the process of tweaking my portfolio for eventual hand off to my wife (just in case I can't follow the regime), so nothing I'm doing has any value to anyone.

  • jad1148 jad1148 Aug 18, 2014 9:58 AM Flag

    IMO, CURRENT interest rates don't matter. It's just a trick propagated by the Fed to push up and then support, equity prices. At least for the time being, don't you feel richer? What will matter, in the not so distant future, is the interest rate YOUR buyer will use to formulate his bid when you decide to sell.

  • jad1148 jad1148 Aug 18, 2014 9:34 AM Flag

    Good morning, hc. I've never been a fan of CAPE. While it adjusts earnings for changes in inflation, it does not compensate for any real growth that occurred over the decade in question, so the denominator is always a bit lower, and the resulting PE ratio higher, than it should be. And, IMO, no amount of normalizing and tweaking the earnings number(s) will ever give them any credibility as a valuation tool (same goes for book value).

    FYI, I've pretty much lost interest in equity valuation (no interest at all in BRK and marginal interest in everything else), so if you find that I post less and less, you now know why. IMO, even the recent historical data for dividend paying stocks has been badly damaged by excessive financial engineering, thus making the valuation process for even those stocks much more difficult.

  • jad1148 jad1148 Aug 17, 2014 10:22 AM Flag

    Not at all, search for following (it should be on Regents Exam Prep Center):

    « Examine the differences between qualitative and quantitative data »

  • jad1148 jad1148 Aug 17, 2014 4:56 AM Flag

    mv, IMO, "material discount" is a qualitative weasel word, it has NO quantitative significance. It IS whatever you want it to be.

  • jad1148 jad1148 Aug 16, 2014 2:38 PM Flag

    Thanks for the laughs, hc.

    IMO, that was a pretty pretentious post. Since Jim believes he knows BRK's IV with a higher degree of accuracy than WEB does, maybe he should offer to sell him a lunch and use it to teach the Oracle of Omaha how to correctly value BRK.

    Generally speaking, I do have a lot of respect for Jim, his knowledge and opinions, but today, at least in my opinion, he dropped a couple of points.

    In this one, the koolaid, strong it is.

  • Reply to

    Bearishness is for Losers

    by jad1148 Aug 13, 2014 4:43 AM
    jad1148 jad1148 Aug 15, 2014 7:50 AM Flag

    « If you owned it back in 2007 before there was a buyback threshold, what did you do then to estimate its value? »

    Well, I certainly didn't believe it was worth 194% x Book, or I would not have sold it.

    My thoughts on valuation have changed dramatically over the years and what I believe, either now or then, no longer matters.

    When WEB first announced the buyback at 110% of Book and followed it up a week later with the "buying a dollar bill for 90 cents" discount remark, I was absolutely furious. It destroyed a short term trade I have going at the time. But once I got over it and began to rationalize his numbers it did make sense. WEB no doubt uses a higher, businessman's discount rate, not the silly, implied rate that retail is willing to accept. He also very likely has a better sense of what future growth rates are likely to be (his interest in population growth rates is a strong clue in that direction) and has the most realistic view of what BRK could actually distribute as a dividend (10% annual growth in book value per share does NOT imply a future dividend/book rate of 10%).

    JMO, have a good day.

  • Reply to

    Bearishness is for Losers

    by jad1148 Aug 13, 2014 4:43 AM
    jad1148 jad1148 Aug 15, 2014 5:53 AM Flag

    brkahoo, you're obviously promoting the seller's side of the argument. Fleecing the sheep is kind of fun isn't it? I I know, I did it in December 2007. I didn't pump it, but I didn't try talking it down either, and the financial rewards (for me) were wonderful. But I do still feel guilty about taking advantage of someone else and the damage that period of overvaluation caused the stock still lives on today.

  • Reply to

    Bearishness is for Losers

    by jad1148 Aug 13, 2014 4:43 AM
    jad1148 jad1148 Aug 15, 2014 4:55 AM Flag

    The problem, as I see it, with Bull Markets is the unfair wealth transfer that occurs between buyers and sellers. Today's foolish buyers will be sellers themselves someday in the future. If they can't find a greater fool to bail them out then they will have to accept a lower (than expected) return on their investment.

    As an example, look at BRK-A. Someone paid $203,801 yesterday. That's $32,821 (~19%) more than what WEB and his BOD would pay (buybacks are authorized when the price falls below 120% of Book Value per share). Figuratively speaking, on a per share basis, the buyer gifted the seller the equivalent of a brand new Mercedes (MSRP of a 2014 CLA250 is $29,900) for the privilege of buying his (the seller's) stock.

  • Reply to

    Bearishness is for Losers

    by jad1148 Aug 13, 2014 4:43 AM
    jad1148 jad1148 Aug 14, 2014 4:52 PM Flag

    Congratulations!

    You are correct.

    It IS "an exercise in sarcasm", and of the few people who have bothered to post a reply, YOU are the first person to point that out.

    Maybe there is hope for you after all, assuming, of course, that you understand the points he is making.

  • Read Brett Arends's article:

    "30 reasons not to worry about a stock market crash
    Opinion: Everyone knows that bearishness is for losers"

    It made me smile!

    No need to search for it, John P. Hussman (hussmanjp) embedded the link in a tweet yesterday.

  • jad1148 jad1148 Aug 7, 2014 4:13 AM Flag

    You're right Sean, future real total returns for equities are expected to be considerable less than 6.5%.

    GMO's monthly, 7-Year Asset Class Real Return Forecasts, have a red dotted horizontal line running the width of the chart and is labeled "6.5% Long-term Historical US Equity Return". Jeremy Grantham has pointed out in the past that the 6.5% real return INCLUDES an expansion in the multiple over time and that SHOULD NOT BE EXPECTED to continue into the future.

    IMO, arguing with spirach2 really is a waste of time.

  • jad1148 jad1148 Aug 6, 2014 8:53 PM Flag

    I have no idea why he pops in here occasionally. He is without a doubt the most obnoxious, mean-spirited, hateful, individual I ever met, save one. I'm pretty sure the majority of folks over on the other board have tired of his nonsense as well. I do believe he has been "P-Boxed", (put in a virtual penalty box) in the past for obnoxious behavior.

    Today someone asked for clarification on something WEB was reported to have said in the past (2008 AM) and, of course, he couldn't resist the opportunity to immediately throw out a nasty insult (msg # 212077).

    But seriously, don't waste your time with his hateful nonsense, read Jim's intelligent, thoughtful, reply/analysis instead (msg # 212082). Apparently WEB hinted at what he thought BRK might be worth in 2020.

    As always, JMO.

  • jad1148 jad1148 Aug 6, 2014 1:52 PM Flag

    LOL, spirach2. It is interesting that YOU would bring up monkeys today, considering what you've just pulled over on the other board. It's obvious that "flinging it" is your one and only core competency.

  • jad1148 jad1148 Aug 6, 2014 11:15 AM Flag

    Thank you, Sean, we're on the same page.

  • Reply to

    Entry point

    by margate1980 Jul 22, 2014 11:39 AM
    jad1148 jad1148 Aug 6, 2014 6:58 AM Flag

    Wait for the fat pitch!

    "Buy It Like Buffett".

    Don't pay more than ~$114 ( 120% of book value per share, $94.99 as of 6/30/2014 ).

  • jad1148 jad1148 Aug 6, 2014 5:34 AM Flag

    Sean, this article addresses and supports what you wrote earlier in response to my question for Hussman regarding the effect share repurchases have on the real (net of inflation) PER SHARE growth rate.

    « So now the question is... How long will corporations keep buying back stock at current or ever-increasing levels? Will this source of demand continue? »

    It looks like share repurchases should be view as a temporary event because funding has been a result of [1] a build up of excess cash as a result of a reduction in capital expenditures which, in turn, has been brought on by a lack of investment opportunities due to a stagnant economy and [2] taking on excess debt, thanks to the Fed's ZIRP.

    I would still like to see Hussman and/or the guys at GMO address this question.

  • jad1148 jad1148 Aug 4, 2014 8:34 AM Flag

    Good article, hc, thanks for the heads up!

    « Indeed, in falling markets, no-dividend stocks tend to get hammered, while higher-yielding shares often hold up better. That goes to a more fundamental issue: To make money from a company that never returns cash to shareholders, you're dependent on someone else coming along and paying more for your shares than you did. »

    And THAT, in a nutshell, is why I don't own BRK.

  • Reply to

    A Hint of Advance Warning

    by hjclasvegas6969 Aug 3, 2014 8:06 PM
    jad1148 jad1148 Aug 4, 2014 5:41 AM Flag

    According to his Twitter profile he sees himself as a: "Realistic optimist widely viewed as prophet of doom."

    I have an idea that I would like to see him adddress in his Weekly Market Comment, but can't find a way to pass it along to him (e-mail, snail mail, etc.) other than to create a Twitter account and tweet him, which I am reluctant to do.

    Here's my questions: What effect do share repurchases, "buybacks", have on the real grow rate? Would you be willing to pencil-in, say, a 1% per year share reduction for the next 100 years, bumping the real growth rate up accordingly?

    Inquiring minds want to know.

BRK-A
205,880.00+1,840.00(+0.90%)Aug 29 4:03 PMEDT

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