Subject: Re: Thanks

People here say Brk is overvalued. I disagree. You always have to look at the ***relative valuations.

Whether Berkshire is able to earn good returns starting from this point will only be known with hindsight. Significant earnings growth is one way.
What we can say with certainty are the following :
- The price relative to any metric for value you use is the richest it has been for a long time - probably since 2007 if I am not mistaken.
- Buffett stopped buying back shares a while ago as the price kept increasing. I think he last purchased below $470 per B. So clearly the current price is very likely above his assessment of intrinsic value. He should know !
- Obviously intrinsic value will keep increasing if Berkshire continues to compound well in its business so ultimately price and value will synch up.
- From starting points similar to today, returns have historically have been mediocre for long periods. I think it was 6 years from the rich valuation in 2007. For those who intend to hold for many decades going forward, this really doesn't matter.

One of the key concerns everyone managing their own portfolio will have to deal with is how to manage concentration risk. A number of Berkshire shareholders have traditionally had very large proportions invested in Berkshire. As the company approaches the post-Buffett era and goes into a signficant management transition starting from a rich valuations, the market is offering pretty generous terms on which to lighten up and get some diversification for those who want to do it. That's what I have done.