No. of Recommendations: 12
Offhand, one might reasonably expect owning one share of Berkshire to get you at least around $2k/month of price gains in the next three years.
(assumes typical/conservative trend of value growth, and selling at a typical/conservative multiple of value)
Multiply your number of shares times that number and see if it's enough.
If so, there's not much reason to work harder.
...
Any idea what this number looks like today? At the same $2k/month I'm meeting my current needs but not saving much for future ValueOrGoHome.
Two answers.
If starting on a typical valuation day around now, it's pretty easy.
In the last ~20 years the average P/B has been about 1.4. Book has risen about inflation + 8%/year. Let's figure about inflation + 7% for the future.
Book is currently $437580. 1.4 times that is a "normal" price for now of about $612600.
If book rises inflation + 7% in the next year, and the price is 1.4 times that, the price will be about $655500 in a year, a rise of inflation + $42883, or inflation + $3570/month.
(note that's after inflation, not the $2k nominal from that old post)
However, unfortunately for near term prospects for price rises, today's market price is not $612600, it's $663000.
So: three years of book growth at inflation + 7%/year would put book at $536000.
1.4 times that would give a rough expected market price of about $750500 in today's money. That's a forward three year price rise of inflation + $2430 per month.
That same set of figures equates to three years of inflation + 4.22%/year CAGR from today's price.
Since people like to compare them, 5 year TIPS yields are inflation + 2.06% at the moment. 10-year at 2.32%. My wild speculation is that those will do materially better than the S&P 500 for many time frames ending in the next 10 years.
Jim
