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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: rrr12345 ⎊  😊 😞
Number: of 22353 
Subject: Re: Value Trend
Date: 05/01/23 2:03 PM
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"Depending on whether you look at data from 1999 or 2003 or 2008, models applied to today's ratio suggests one might anticipate a one year forward return of inflation + 14.0% to inflation + 14.9% from here."

Another variable that affects Berkshire's forward 1-year returns, besides starting P/B, is the return of the broad stock market, or more specifically the return of Berkshire's equity portfolio. Berkshire's equity portfolio, net of deferred taxes, still makes up about half of Berkshire's IV. In 2022 the S&P 500 declined 18%, while Berkshire's equity portfolio declined about 17% and BRKA stock rose just over 3%. Plotting the annual returns of BRKA stock versus the return of the S&P 500 from 1994 to 2022, the trendline return of BRKA when the S&P 500 returns -18% is -4%. Therefore one question regarding Berkshire's return over the next 12 months is, "What will the S&P 500 return over the next 12 months?"

The starting point for forecasting the return of BRK stock is value growth and P/value, which are currently about 10%/yr and 1.0, suggesting a forward return of 10%, but with the S&P 500 trading at a trailing P/E of 24, suggesting a return for the S&P of about 4% (considerably less if there is a correction in the next 12 months) I would lower the forecast for BRKA, possibly quite a bit.
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This community has written 21,861 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 58 recs · 2023
Summary of 2Q 2026 · 55 recs · 2026
3Q Summary · 53 recs · 2024
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