Subject: Re: Current Price To Peak Book...
One of the great values of posting on forums like this is to have your ideas stress-tested. I'm happy to be having this experience. I am moving to using trend book value as a quick shortcut for valuing BRK. I want to verbalize my thought process, rather than any actual math, to expose any potential weaknesses.

The S&P has long been considered a reliable, long-term market investment that is expected to grow at a particular rate, i.e. Seigel's Constant. The premise, I suppose, is the S&P represents a slice of the economy and grows along with it. Stocks are added/removed to ensure it remains representative of the economy.

Berkshire has become sufficiently diverse to share that trait. But it's also different in one important respect. It's a curated list of companies selected not to match the general economy, but rather to be a collection of reliable companies growing at an above-average and sustained rate. "Our favorite holding period is forever." -- Warren Buffett

So why not give Berkshire its own, slightly higher, Constant? Back-calculate it, which I'm assuming is how Seigel's Constant was derived, and use this Berkshire Constant going forward.

That is not to say I don't have caveats or concerns. For example: (1) Buffett has liked BV in the past but now expressly says to not use it going forward. (2) Berkshire's business could change significantly, altering its rate of growth. (3) Externalities could change the U.S. or worldwide economy. These are concerns, but I don't plan to blindly use the calculated trend. Rather I view it as an expected path going forward and will watch the numbers and the company as I walk towards the future and make adjustments as necessary.

I would like to address Jim's concerns directly. I have a deep respect for your opinions and am very interested in understanding your reservations.

"The fact that the figures have trended so well should be considered a cute coincidence ..."

Is it? Or is the conglomerate that is Berkshire big enough that its temporary strengths and weaknesses roughly cancel out and it grows along with the economy but at a slightly faster pace as discussed above?

consider the UK economy recently<\i>

Brexit was the train wreck that lead to dire outcomes for the British economy. This was very public and very obvious when it was passed more than three years ago. I know this is just an example, but I think it illustrates that something significant to destroy an economic engine should be obvious enough, early enough, to point out that the model has broken. Adjustments can be made before the damage is inflicted.

The results in the 2000s and 2010s say pretty much zip about what's going to happen in the next decade.<\i>

Most of 2013 Berkshire remains part of 2023 Berkshire. Sure it's grown, but those new businesses are in the same character and style as Berkshire has always held. I believe the next 10 years of Berkshire's growth will be quite similar to the last 10 years. It will certainly rhyme, IMO, and probably something even closer than that.