No. of Recommendations: 9
Just some personal observations about the effects of Berkshire´s wild swings in price:
Though I promised to myself after it reached $470 and selling some to never ever sell another share (then 60%of net assets), at $520/$530/$540 every time I became weak again, with Berkshire now down to 40% of net assets, the lowest ever.
Cash from the proceeds kept up piling as I didn't know what to do with it. Additionally from gains from puts I regularly bought and sold while Berkshire moved up and down between $520-$550. A huge bet, with at the top puts having been 10% of net assets, which worked out superb. Having as half as much puts now the situation is "balanced": When Berkshire goes down the loss in share value and the gain in puts value effectively cancel each other out (The value of the puts is around 1/6 of the shares, and if Berkshire falls 1% the puts go up 7%-8%).
What's new: That I have a hunch this year the day will come when I can put my cash to work again --- by buying Berkshire shares. Under $450 I will start accumulating. I didn't update my Price/PeakBV chart since a long time but think a 1.4x PeakBV is somewhere around that price?
No. of Recommendations: 19
Under $450 I will start accumulating. I didn't update my Price/PeakBV chart since a long time but think a 1.4x PeakBV is somewhere around that price?
I have no prediction to make, but for a possible sense of scale, in the last 20 years price-to-peak-book has been under 1.343 for 1/3 of the time. That's about $404 per B share at the moment, though of course it rises over time. 1/5th of the time P/peak-B was under 1.277 in the last 20 years, or about $384 at the moment.
Without a doubt a re-entry at $404 would be more profitable long term than one at $450, but of course I have no idea whether the prices OR valuation multiples will ever get that low again. My comments are merely a reminder that it's certainly possible, and in the recent past wasn't even all that rare.
Jim
