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Seeing people I respect talking about selling part or all of their BRK,
and watching BRK-B making new high after new high,
and watching it setting deep in overvalued Price/Book territory,

I was seriously considering selling a big chunk of my BRK, as it has been my largest holding. The one thing that had me pause was the large capital gains hit in the taxable accounts. But, oh man, $525! Nosebleed territory. "Don't let the tax tail wag the dog."

This stupid long OT thread, though, had a number of posts that got my head back on straight. "Don't sell Berkshire." "Hold the dang stock."

So, thanks for getting my mind right.

Yesterday I sold a covered call against part of my position. June $530s for $21.18.

So, I sold shares for $551.18 ($530 + $21.18). About 5% more than price to peak book.

Three things can happen:

(1) The stock closes below $530 and I keep the $21.18 premium plus the additional ~4% interest that cash is earning.

(2) The stock closes between $530 and $551.18 and I earn a smaller profit.

(3) The stock closes above $551.18 and I would have been better off sitting on my hands.

The point of owning stocks instead of bond of a company is because stocks can go up a lot more than anyone’s imagination and have unlimited upsides.

I never want to sell calls. What’s the point to earn 2% extra at the cost of paying capital gain tax and buying it back at higher price? If you are worried, just buy puts.

People here say Brk is overvalued. I disagree. You always have to look at the ***relative valuations. People in china are moving their dollars out and buying US real estate and mega 7 and now perhaps Berkshire (today on reddit someone from Asia asking how to view annual meeting online). Everything else is trading at pretty high valuations, including gold. If you sell, where else you put your money? Europe, Japan imo are one trick pony market— their economy is not as dynamic and robust as USA. Trump is a risk but WEB has a lot of cash.

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.

Mr. ppant,

Your arguments are entirely rational.

Thank you. I've always appreciated your contributions.

Today I sold my first BRK shares since beginning to acquire in 1998. Felt surreal.

Didn't sell all, but did lighten up by 20%. I received $528.xx for them.

One other point I'd add to your list: *You only need to get rich once.

I'm not rich, but i like the sentiment...

m

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