No. of Recommendations: 0
>>I guess I would have to agree that an overvalued (technically just more-richly-valued-than-usual) stretch being followed by a cheaper-than-usual stretch is more than a 50/50 shot, but I still prefer to assume agnostically that the price will be typical at the end of the investment interval I'm interested in, rather than try to in effect forecast a future cheap stretch! Enough people call me a permabear already.<<
When you say "typical" price, are you referring the the mean P/BV, which over the last 20 years has been 1.4, or are you referring to the mean analyst estimate of fair value, which is about 1.6?
My own estimate of IV (FWIW) is about 1.54x BV. Berkshire's price was 12% above that (P/BV = 1.78) on May 2, immediately before the annual meeting, and has now fallen to 1.54x estimated June 30th BV, i.e., very close to my estimate of IV. The decline in price began on the first trading day after the annual meeting, which is more than coincidence imo, but that's another story.
So we're left with two questions: (1) How far will the price fall? and (2) at what price will Buffett repurchase stock, as his repurchase price will affect the stock price?
This permabear thinks (or wildly speculates) that the stock will fall lower over the next three months, perhaps by another 12% to 1.35x BV, unless Buffett comes in and repurchases stock at 1.5x BV, as he did in late 2023.
As Yogi Barra said, "Predictions are difficult, especially about the future."
