I expect the value per share to grow at around inflation + 7%. If we get lucky, inflation plus 8% at the upper end, but I certainly don't count on that. That's what we have seen since forever, but it's hard to manage at this scale.

That's value. What about price?
Lacking any better reasoning, I imagine the valuation levels will be similar to the levels typical in the last 15 years, so I expect some one-time multiple compression, so (very roughly) two of the next 5-10 years will be flat. (even rounder numbers to explain that, valuation level 16% above usual would imply two years of flat price with 8% value growth and ending at the "usual" valuation). Note, I don't have any real idea of *which* two years will be net flat.

If you look out a decade, two years of inflation+8% and two years of nothing works out to an annualized return for ten years of about inflation+ 6.4%. Which, being roughly Siegel's constant, is pretty much my definition of fair value.

Berkshire is more expensive than usual, but then it's usually somewhat underpriced, so the two seem to cancel out at the moment.

Jim

Berkshire Hathaway FAQ

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