Subject: Re: Berkshire Valuation v Fairfax Financial
thanks Longtimebrk. Yes I agree completely with both points on BNSF and Apple.

The current 30x for Apple looks unappealing (Taiwan, sheer size of the business, saturation, tech risk of disruption). I can see why Berkshire would never sell though - it's an incredible business obviously and the taxes would be huge. Sell, then what?

Yes UNP has a big market value. My BNSF earnings number is based on Q2 2023, which could well be depressed in some way. Certainly I am not aware of any reasons why BNSF is not as good a business as UNP in the long term.

Below is just a bit of a unrelated ramble out loud.

Feels good though to be super conservative. It's a brutal world out there and eventually everything goes to zero -:)

The idea of calculating an intrinsic value and then buying with a margin of safety below that, is something that took me a few years to fully appreciate. I remember originally thinking that a MOS was how you made your money as the gap closed, which can have some truth but as Buffett has said, MOS is his due diligence. I like that idea and if it applies to Buffett with all his work and insights, if the less able are to have any edge, an even bigger margin of safety should by definition be demanded.

Mungofitch has mentioned previously that Buffett's fail record is unparalleled. Buffett takes the margin of safety idea very seriously. The future is always uncertain to varying degrees. A conservative IV calculation although different from MOS is in the same arena.

Of course this is all very different to how the big S&P 500 firms are valued today. Will all the excess cash lying around the world, who knows what will happen to stock prices but given the destructive nature of capitalism and competition, conservative intrinsic value calculations and margins of safety when buying make a lot of sense. This is such a different world to what is going on in the markets the last few years...