No. of Recommendations: 5
"If inflation were to come out at 3.25%, that would mean an expected market price of $385.50 in a year."
Jim, I have no quibbles with your assumptions about inflation. However, your models' expected market price of $385.50 in a year is interesting.
In a different thread, you have predicted book value at the end of Q2 2024 to be $280.67 for a B share ($421,100 for an A share).
https://www.shrewdm.com/MB?pid=474517153&wholeThre...You have also projected an increase in book value of 2.5% per quarter, at least for the foreseeable future. Hence, the expected book value per B share in a year (to be precise, at the end of Q2 2025) should be approximately $309.80.
Since your models are predicting an expected market price of $385.50 in a year and projected book value per B share at the end of Q2 2025 is $309.80, the equivalent P/B is 1.24.
Is your central assumption that Berkshire will trade at a P/B of 1.24 in a year?
An alternate view:
If Berkshire trades at a P/B of 1.4 (very slightly higher than the average since 2008, but nothing extraordinary, especially given that the cash pile has now started earning something) the expected price in a year is
1.4 x 309.80 = 433.72 (i.e., approximately flat from this point).
The above projection is very simplistic and does not utilize any of your (likely complex) models. So I welcome your thoughts on the difference.
