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Dealraker made a point worth contemplating: "Time for a lengthy discussion on return on equity or how over-valued the S and P is!"

Like some of you, I have a Value Line subscription and periodically set aside time to look VL company reviews both here in the USA and elsewhere. Today I looked at UK companies as there is an article in today's Financial Times comparing and contrasting the valuation of UK listed companies versus US listed companies. I was hoping to find some eye watering possibilities and instead found what I usually find when looking at VL reports of US listed companies. What I find is something like the 98/2 rule as 98% of the companies are at best average but with debt to awful with debt. Lessening my standards to widening the field to 80/20 requires considering companies with all sorts of warts. The biggest wart of companies with P/E ratios in the 14 to 20 range is how their earnings numbers do not have a nice looking southwest to northeast plot trend. So many have little positive (upward) correlation over ten years. These evaluations are now getting dicey as I put inflation discounting onto the past two to three year numbers. A local business has seen approximately 30% material cost inflation the past three years. It has adjusted by increasing its product prices commensurately. It now shows higher sales numbers and higher profit numbers. If adjusted to inflation, those numbers do not equate to revenue and profit growth, only a flat line condition. It reflects the value of money and this must be considered when looking at graphs, in my opinion.

In my estimation, companies with good management, good revenue growth, good profit growth and little or no debt are rare. When they get cheap, the obvious strategy is to buy them. An additional investment strategy follows Jim's dictum stated back in March/April 2020 regarding buying those more doggy looking companies that have fallen the most. I did that and have a nearly seven bagger (MPC) arising from following his dictum.

Back to market valuation, in our state (NC), we have had firms owned by private equity firms suddenly close in the past two weeks with a total of about 2000 employees suddenly losing their jobs. The company in our town closed so quickly there was no meeting of the federal 60 day notice for the 850 displaced employees. The company has essentially no assets as everything of permanent value was sold and leased back, so nothing much of value to be sold to pay creditors. The story told is one of the biggest banks said no more credit line funding and it was immediate extinction. The PE company that owned this local company allegedly has $2.5B in assets in its portfolio companies.

We know of a five year old technology late stage start-up company in our town that has been talking to PE/VC firms with only one of twelve firms willing to talk with their non-profitable company. The company has growing revenues and a good market niche, just needing another three to five years to grow into its cost efficiency zone through higher manufacturing volumes and better coverage of its marketing/sales expenses. Suppose these stories are happening in the other 49 states? If so, then this may indicate a discounting mechanism is at work. First taking down the valuations of small and privately held firms and then, presumably, at later dates taking down the valuations of the doggy looking public firms mentioned in above and then lastly discounting the good looking public firms.

Higher interest rates do matter it seems.

In the meantime, I am watching my existing positions and sitting on my hands waiting for high quality companies to drop down to better prices.

How about my fellow investors on this esteemed board?

Uwharrie

Public company valuations are lofty and do not reflect belt tightening from consumers and increased costs for materials / wages and interest rates (borrowing) lower net margins and profits (% wise) will suffer. There is a significant lag as interest rates bite. Valuations need to drop also due to risk free rate< valuations do not reflect this imo also.

Reminds me of the property market when you have a Mexican stand off where properties sit at high valuations but people cannot get mortgages at required rates to afford said properties and prices will adjust lower over an extended period.

There will be forced sellers due to refinancing required and similarly companies will start announcing poor results and worsening outlooks as DG did today.

Grind down throughout 2024?

The Berkshire board is an interesting place of those waiting for the big drawdown to put cash to work. Years pass, drawdowns come (How long ago was the Covid "drawdown?") and go and...

...investors on the board are discussing cash levels and the over-valuations all around. Time, years of time, pass.

To counter this:

In 2014-15 or so (too lazy to look) AJ Gallagher fell to $35-ish and was yielding 4%. The investment club I'm a part of, the one that began in 1954 and has had two members that people here would recognize the names, got a presentation by (me) a member to buy the stock.

The club bought the stock of AJ Gallagher. The club president (the club leadership has ascended to a younger crowd now) is a Ben Graham believer hard core "valuation counts" sort. Not long afterwards, at about $72 for AJG, the president began suggesting that AJ Gallagher was "borrowing from the future, that the price-to-earnings line had gotten well above 15" and thus the stock was entering the sell phase for value investors.

At $82 the club dumped the stock and went to cash. AJG had entered a phase above the 15x earnings line and thus was of concern, that "borrowing from the future" on the chart that is so overwhelmingly concerning to the go-to-cash bunch.

I voted against the proposal to sell, but the sale went through the club bought Bristol Myers, a true value stock. We still hold that stock and according to club members it is a solid choice of value, a hold.

AJG? Well, to the club members it resides in the over-priced category, a strong sell.

In 1994 my firm merged with AJG. The merger was suggested by my CPA wife who said to me "Charlie, if you sell you've not done much after tax, you guys need to propose a merger." We did, and I had $500 of AJG stock and my partners (2 of them) also had that same amount. My shares were roughly 62,000, my partners too.

Today we each have $14 million of AJG, that over priced entity that my club had to sell on valuation. I'm up about $8 million since the club sold on valuation. I write all this about AJG because while having cash is celebrated as a "I'm superior" model here on this forum, my thinking is so far opposite that...

As a matter of fact, no matter the conditions it seems a large number of us have held Berkshire and cash for years, the ultimate underperforming combo. What makes this the obsession of the board?

So Uwharrie, let me ask you a question: You had a chance to buy Facebook at $80-ish...correct? Over on the Corner of
Berkshire and Fairfax board/forum we had an elaborate discussion on this, detailed to the n'th degree of obsession.

Given the Covid "drawdown" and things like Facebook...Uwharrie please tell me why you have cash waiting for the big drawdown when low debt companies become cheap? Do you need that to do well? Are you like Berkshire in that you have so many billions you are waiting for the elephant?

Brown and Brown, another insurance broker and an absolutely fantastic business, got cheap not too long ago. If you are the Ben Graham type waiting for the 10 pe? Didn't happen! But it did get to about 20 and by damn if you knew anything at all about insurance brokerage and where the business was as to cycle, the industry, and its local Florida situation=====well it added up to "Buy the stock...a lot of it!"

So Uwharrie: Why in the world are you sitting with so much cash? What stock are you waiting for at what price? Are yu waiting for the big recession or depression? Maybe Google, yet another screaming buy recently, at a PE of 12 or so?

We don't have to only consider DG and KMX on this board and forum. But unfortunately we have snuck around to the point of only disussing what is acceptable here, and that is so limiting it has become a severe detriment to those who use this board and forum for their investment decisions.

Holding cash, lots of cash for long periods? I got "lucky" to be orphraned at an early age as far as investing. My family drew me in to the investment world early in life. Half a century later I've never-ever known anyone who got wealthy or did well financially by holding huge amounts of cash waiting for the big drawdown to invest in low debt high quality stocks that fell to incredible bargain single to low double digit pe's.

Cash? Really? So you are a sub $50 mil investor and you can't find investments? You only look at DG and KMX because that's the board leader's stock world?

No spell check or grammar check here. Off to hike with the wife! Interacting to offer a different perspective, the cash one or low pe value stock model drives me nuts.

One more thing: Charlie Munger recently mentioned that Ben Graham, the buy and sell on valuation guy, made half his money on the one stock that he held throughout his life. IQ check?

Just out of interest, how does your wife react when you relay stories to friends, family, her about investments, eye roller or cheerleader?

We don't have to only consider DG and KMX on this board and forum. But unfortunately we have snuck around to the point of only disussing what is acceptable here, and that is so limiting it has become a severe detriment to those who use this board and forum for their investment decisions.

So why don't you offer your own suggestions about good stocks to buy now, with well reasoned analyses? You have a lifetime of investing experience and we would love to hear your suggestions. Most on the board are very hungry for new investment ideas to diversify from substantial BRK holdings.

But unfortunately we mostly hear you whining about what Jim (without taking his name) posts about.

dealraker: "Half a century later I've never-ever known anyone who got wealthy or did well financially by holding huge amounts of cash waiting for the big drawdown to invest in low debt high quality stocks..."

Kinda sounds like Warren and Charlie's approach if you ask me! (How much cash is Warren currently sitting on?) BWDIK?

That being said, I do love the old dealraker!

dealraker: "Half a century later I've never-ever known anyone who got wealthy or did well financially by holding huge amounts of cash waiting for the big drawdown to invest in low debt high quality stocks..." Well stated. Most of us know that Buffett should have been buying back brk at, a material discount to IV, starting at least 20 years ago. Even 1-3 billion a year would have made a dramatic difference. However,Buffett and Munger have effectively worked for free, for 50 years ,hence, we can't complain much.I'll never understand why Buffett was willing to sell his life's work so cheaply beginning in 2008 via the foundations? A huge unforced error on his part.

Dealraker, I do not have cash. Yesterday morning we (bride and I) had 1.5% of our portfolio in cash by last night we have less than .2% in cash (bought DG).

Our cash comes in during the year via our business income and dividend income. We put that to work to buy either existing portfolio holdings or something new. My post yesterday probably was written poorly and missed what I was trying to convey. What I was trying to convey is there are few really good, high quality companies selling at attractive valuations to my eye. The other side of the comment was there are so many companies stumbling forward. Not quite zombie, but not attractive.

In the meantime, I continue to do research to become aware of companies with compelling long-term dynamics. It is a luxury I can afford. The following may sound like a contradictory statement: We put our 1.5% cash to work yesterday buying DG. DG is a big company and at some point it will be at the top of its life cycle S-Curve. For now, it is still attractive at yesterday's valuation. As cash comes in, we deploy into worthy value situations as for example, happened to banks back in the spring when we bought EWBC.

I am perpetually researching Value Line, podcasts, periodicals for small to large companies worthy of future investment. It is part hobby, part long-time investor mentality. I may go years before finding a potential big position to take. When I do, we compare our existing positions to the new potential big position and if the new potential position grades out better for the long haul, we sell the older position(s) and buy the new position(s). Again, we may go years before coming across that opportunity. The last time we did this in a big way was 2020 when we sold older appreciated positions and bought into oil related positions. The world was offering outstanding valuations in the petroleum space.

I admire Buffett's viewing of return on original investment when speaking of Coca Cola and other long-term holdings. It has helped us understand holding on to our positions for a long time. Some of our holdings are now paying more than 20% of the original investment in annual dividend income. When viewing our portfolio, the focus is on the health and long-term viability of each company. If there is a looming threat of long-term consequence to a company, we trim that position. If not, we continue to hold because of the tax aspects and to also continue harvesting dividend income.

Berkshire has been our center core holding for 25 years. We don't sell it. We gift it to our children and grandchild. We it gets cheap, we buy more Berkshire.

Thanks for your comments, Dealraker. I appreciate your feedback.

Uwharrie

I admire Buffett's viewing of return on original investment when speaking of Coca Cola and other long-term holdings. It has helped us understand holding on to our positions for a long time.


Funny, that, it's one of the things Buffett says that I have never understood. Sure, Coke is providing a great dividend return based on Buffett's original purchase, but that will usually be true of a company you have owned for decades. It says very little about whether it's a good investment to hold onto it now, or even whether it has generated a good average rate of return.

Many of us have doubted the wisdom of holding onto KO for the last quarter century, and it turns out that (in retrospect) it would have been much better to ignore the high dividend return and sell it, almost any time in recent memory (including, probably, now.) Holding on to share holdings almost forever only makes sense if the thing you are holding onto makes you more money than selling it and buying something else. Errors of omission can be just as bad as errors of commission (the ones involving new transactions and their broker commissions, right?)

Sure, a great company you bought for 18x earnings shouldn't be sold just because it's now trading at 25x, and especially not if you're just waiting for a general market correction. But buying Coke at $60, at 25x earnings that have been flat for years, doesn't make sense to me, and apart from the tax considerations, it doesn't make a lot more sense to hold onto it, just because its annual $1.76 dividend now represents more than 50% of the $3.25 you happened to have bought the shares for almost 50 years ago.

I can understand boasting about it, in a way, I'd probably do the same, but it doesn't seem like very solid reasoning.

Regards, DTB

DTB,
I am sorry if it came across as boasting. The reality is I am now so slow to make major changes that my default setting is to leave things as they are.

I wished my settings were as glacially slow back 20 - 23 years ago when we owned Apple, Phillip Morris and Labcorp. We'd be worth 3X more now.
Uwharrie

I would second rnam's words...

It is obvious you have a lot of wisdom to share. I am sure everyone, including Jim, would love to hear what you thought were good/ great buys at this moment. Jim has been benevolent in sharing his ideas (and there have been many others with excellent contributions!)

Would be great to have your contributions in that regard.

dealraker I would like to acknowledge and thank you for a company you had written about a couple of years ago viz. EWBC - EastWest BankCorp. I had put it on my watchlist and did not do much about it then and instead invested in other better known names.

It took me a while to come around and spend more time researching it. And the regional bank crisis earlier this year gave me another chance to invest at an attractive valuation.

Thanks for that suggestion and I am hoping you would share more ideas on companies that you think are good investments now.

Cash? Really? So you are a sub $50 mil investor and you can't find investments? You only look at DG and KMX because that's the board leader's stock world?

C'mon deal, why this acerbity? If you don't like the ideas graciously offered by others just ignore them. Why don't you post some well reasoned ideas? I find your ad hominem attacks pretty annoying and undeserved, I'd welcome fact based criticism of ideas but not this childish ad hominem attacks on a very valued and gracious contributor.
BTW, I first bought KMX and DLTR (got the the idea among many others from Benkea) way before they were mentioned on this board, sold them and regretted it. I've been following them since then and I simply should have hold both of them.

DTB,
I am sorry if it came across as boasting. The reality is I am now so slow to make major changes that my default setting is to leave things as they are.

I wished my settings were as glacially slow back 20 - 23 years ago when we owned Apple, Phillip Morris and Labcorp

You and I both! If I had kept my 1600 shares of Apple that I owned in , I think, about 2002, I would now have about 60,000 shares worth about $18 million.

But I was not referring to your boasting, but rather, Buffett's, the boasting you found inspirational! And so it is, in a way: holding on to good companies and not selling just because the price is up a bit, is, I am quite confident, the correct default strategy. But if the company has become just ordinary (my opinion about Coca Cola), the high dividend rate, based on the low historical purchase price, should not be the reason for hanging on, that's all.

d

Wisdom is better shared before the fact, not after it. For example, touting Meta after it had dropped below $200 or $100, not after it has come back from $80 to $300. I respect Jim precisely for his willing to share idea when it happens. I also respect dealraker for his willing to share valuable past experiences.

Ha ha...Maxthetrade, You are simply better in saying what you think without mincing words...Me, not so much

Hopefully, dealraker will come out with his best ideas for "now" rather than discuss those that happened before...

Dealraker: of course, we are very happy for you that you hit the gold multiple times ...but the greater benefit, forget the financial gains...but just even from an intellectual curiosity, would be to share them as you see them rather than "talking" about it in past tense.

We know very well that you are/were gifted in spotting opportunities....So, please feel free to share what your thoughts are currently....We do appreciate that.

the cash one or low pe value stock model drives me nuts.

Fair enough, but bear in mind, that is the approach of many who aren't trying to get rich, they are just trying to stay rich. I believe WEB has said something to the effect of "when you've won the game, you don't have to keep playing." Low returns and low risk go hand in hand. BRK is past the point of something to get rich quickly off of it just offers a bit better return than other low risk investments

Sorry rnam, but in a different place and time you and I would have some success discussing ideas. But Jim owns this board, it is whining to state that outside Berkshire his posts are in my view simply awful.

Down the road we go. I've attempted many company discussions but they don't get responses, the board is waiting for someone else's posts and yes that's Jim and only Jim. It is the norm everywhere except over on our COBF where that like tap isn't the focus.

Life is great...if you can stand it.

Long ago when Manlobbi was writing elaborate posts on BPY I protested, I offered an opposing view. Manlobbi's likes put Jim to shame and the BPY outcome? Well, it got taken away but to say the least the value of BPY has proven to be tiny fractions of what was presented...and liked by all.

The like tab? I don't get many of those, not looking for it. Don't need it.

Don't need a daddy figure to lecture me on return on equity either, but here and only here that's the game being played. It is what it is, nothing but standard group behavior.

For someone who claims to not care about the like function you sure seem preoccupied by it.

and yet to see the guy pitch an idea.

Ploink!

rnam,

Maybe it is invisible...or something...but I think through the years I've brought up AJ Gallagher and Brown and Brown about 375 times on the Berkshire boards. Gets an occasional reply but that's about it.

There was this financial marketing stock, then CarMax, the the Dollar...and of course on the old board the Amazon and Tesla/Bezos and Musk obsessions that dominate all forums just as Cisco and Intel did 25 years ago.

The Berkshire board is like all other forums in that it has a very short attention span and VERY short outcome focused perspective. That's why, no matter what, the board will have a very few focused on buy/hold while the dominant theme will be generally one poster's in's-and-out's of whatever the current obsession is.

The COBF forum is longer term, still too short for my perspective, but many times longer that Jim's quickie trades. That's the theme here.

I far preferred Manlobbi's "steadfast" writings, I just couldn't fathom the math and "let's ignore the facts" of BPY and so I spoke up about it and you know what that means. The thing that's really cool about COBF is that there is not a dominant poster, the likes are not the theme, and thus? Well, you'll do a lot better if you participate in such a forum as that rather than get in the grunge of popularity needs, the daily need to get the likes rules here.

Where do I find the COBF forum?

Thx

https://thecobf.com/forum/6-berkshire-hathaway/

Charlie Munger on Envy:

https://medium.com/@DenisBischof/charlie-munger-en...

"The first thing, to truly avoid is envy. Envy is the feeling of lacking whatever another person has, may that be looks, possessions, character qualities etc. There are different forms of envy, basically good, which can motivate, and bad, which destroys so to speak (simplified). We will focus on the bad side of envy."

"Even in the old jewish and christian religious texts, envy is a sin. So it long accompanied humans.

'I think envy is one of the major problems of the human condition, and that's why it figured so prominently in the laws of Moses. Remember, he said you couldn't even covet your neighbor's donkey.'"

dealraker,

Most of your posts are anecdotal, about the great success you had investing in this or that stock decades ago. They don't provide much rationale on why you invested in them then or whether they are worth buying today. But they do offer ideas to investigate further. I discovered EWBC from one of your posts and started a position recently after the regional bank crisis. And I do recommend some of your posts, just not the ones in which you rant about Jim getting more recs than you or being wrong on this or that stock.

Jim on the other hand offers lots of data and reasoning in his posts, so I find them very interesting and educational. Because of my tax situation, I do not trade options or sell positions with large capital gains. Nor do I try to implement Jim's 'mechanical investing' screens, as I don't have the temperament to hold lots of stocks and trade them frequently. But they are still teach me a lot about valuation. Sure, some of the 'value' stocks Jim wrote about like BPY, Alliance/Bread have turned out to be cigar butts, but then Buffett too has had many failures like airlines, KFT, USG, Tesco and many mediocre banks. But Jim explains his ideas with lots of data, projections and qualitative discussions on the business and how he arrives at an intrinsic value. And all for free. This is what I find very interesting, even if I implement very few of his ideas.

I also like Charlies other ref to Envy...

'What good is envy? It's the one sin you can't have any fun at.'
' Charlie Munger

This also got a chuckle from the site you referenced Tex,

"As said before, we compare relatively, most with those we know really good or with whom we have a similar starting point. But what is frightening, when we are envious, we not only feel bad, we make often poor and unreasonable decisions. Consider this Russian proverb, paraphrased by Peter Bevelin:"


'There is an old Russian story where a farmer finds a magic lamp. He rubs it, and a genie appears who promises to grant him one wish. The farmer thinks for a moment then says: 'My neighbor has a cow. I don't have a cow. I wish my neighbor's cow dead.''- Peter Bevelin

ciao

'There is an old Russian story where a farmer finds a magic lamp. He rubs it, and a genie appears who promises to grant him one wish. The farmer thinks for a moment then says: 'My neighbor has a cow. I don't have a cow. I wish my neighbor's cow dead.'

*sigh
Some stories are timeless.

Jim

Ciao8

I also enjoyed the Russian proverb. Glad you brought it to this board's attention.

Many decades ago, Exxon had me attend a training course called Games People Play. I don't know if it is the same one now used as part of teaching game theory. But a few things stuck with me.

One was a slide that showed an attractive women in a bathing suit inside a large, clear, plastic bag. The caption read: "We all have our bags, and everyone can see right through them." So true.

Another was that one common game is "I'm OK, you're not OK."
Unfortunately we still see that in some posts.

Jim seems to do just fine by explaining why "He's OK" with some investments - and why "He's Not OK" with others while avoiding the "You're not OK" part. Wish we all did.

First, Manlobbi, not Jim owns the board. I think Jim is a smart man, and it is nice of him to share his ideas. No one is obligated to follow them. If you have something to teach us, please share it. Also, on any board, there will always be some people who post more and some who post less. That is normal.

Whatever rnam, the board it Jim's and it is what it is. Again we are focused on very short term here and that's the game. It is in-and-out and post up the outcome.

So years pass and we do KMX and DG, they turn out poor for those playing follow the expert (or the superior mind as smurf calls it) but at least we all did it, so there's consistency, social proof, and reciprocity in the back and forth compliments.

The maturity of someone who comes on the board and posts, "Hey, I bought DG yesterday and stock was up 3 points today so..." and then the like tab lights up with double digits is one for insight. My goodness we went from a month time frame to one day?

No, the need to get daily likes and suport dominates and one person dominates. Those of us looking for a more mature longer term discussion get dunked by the guy stating, "Yes I sold today, got my short term 10%, and I'm happy as can be about it." Being fearful of business ownership isn't why most come to the Berk board initially but we do all have social needs to that's where it goes.

And it is that way on all social media. Life is great...if you can stand it.

< Whatever rnam, the board it Jim's and it is what it is. Again we are focused on very short term here and that's the game. It is in-and-out and post up the outcome.

So years pass and we do KMX and DG, they turn out poor for those playing follow the expert (or the superior mind as smurf calls it) but at least we all did it, so there's consistency, social proof, and reciprocity in the back and forth compliments.>

A little strange here. In the first paragraph, you emphasize long term, and immediately you are using short term result to rail against an investment idea. Who is to say KMX and DG won't follow the price pattern of META in the past year?

Dealraker, Thank you for pointing out AJG and BRO. Both companies have beautiful 10 year charts, beautiful revenue and profits growth. There is some dilution and I'm guessing some/all acquisitions are stock swaps, yes? AJG has a high P/E at the present.

Please help me with the following questions:
' How much future growth runway do you see for BRO and AJG?
' Are there times when they have more attractive valuations or are they essentially Costco type situations where it does not matter all that much when you enter?
' There is a heck of a lot of rolling up now occurring in the property and casualty local agent industry. I know of two separate groups literally gobbling up all the best local agent groups here in the Southeast and I'm told doing the same elsewhere. My fellow Rotarian merged his large footprint local business into one of these two groups and now he is managing 3X larger footprint as more groups are being pulled into the system. He is young, excellent manager and the group he is in is putting him in charge of more agencies in adjacent metro centers. His view is it is get large or go out of business one day. The central thesis is the insurance companies want to reduce their support expenses so they are happy with the massing of local agencies and the local agents see they need to mass up so as to have leverage with the insurance companies. I cannot say I fully understand those seemingly opposing dynamics. It seems to me this is the long running trend of systems seeking greater size for survival and profits that has been seen in many industries. What will all this rolling up of insurance agencies by now private behemoths that will one day to be public entities do to AJG and BRO? With they snap up these pre-packaged groups of successful (the best local agencies)?

BTW, I wished I looked closely at AJG years ago when you were mentioning your AJG holdings. It was a case of my not being interested in insurance at the time. AJG has a better looking stock appreciation chart than BRK and many other holdings in my portfolio.

Uwharrie

well that scared him off...

I've never come across a more miserable (allegedly) rich person.

Obviously someone hurt you emotionally at some point in your life. I hope you can finally overcome it and find some joy in your remaining years.

Please stop the ad hominem attacks. Troll behavior is easy but not helpful for anyone. dealraker (aka chompin) has made many interesting stock suggestions over the years, and often throws in some useless trash talking. Some of these stock tips are not explained as clearly as mungofitch's posts, at least to me, but few people have mungofitch's clear writing style. I can follow mungofitch's logic, and appreciate the effort in teaching me how to fish. dealmaker sometimes shares fishing tips without much explanation. These can be useful.

Both dealmaker and mungofitch value Dartboard portfolios and Berkshire. Both are busy with life, and I appreciate the time they spend posting here. And there are many other high quality posters.

Anyone making ad hominem attacks loses my confidence. ad hominem attacks are a sign of weakness. Why not discuss the investing topic directly? This is not a beauty contest. We are here to discuss investing. The ignore button is always available.

==== links to chompin stock suggestions ====
"I'm a 25 plus year owner of Lowes and AJ Gallagher, two above average businesses"
http://www.datahelper.com/mi/search.phtml?nofool=y...

AJ Gallagher
East West Bancorp
Norfolk Southern
http://www.datahelper.com/mi/search.phtml?nofool=y...

From Jan 2018 to now:
14.1% CAGR Equal weight EWBC AJG NSC BRK.B no rebalancing
11.5% CAGR for SPY
https://www.portfoliovisualizer.com/backtest-portf...

"Almost all have done reasonably well and we are not good overall stockpickers. It is the model that works, not our smarts."
http://www.datahelper.com/mi/search.phtml?nofool=y...

"Berkshire is easily the best stock to own during this era, owned since 1975."
http://www.datahelper.com/mi/search.phtml?nofool=y...

Thank you! This deserves to become "Post of the month" or whatever. This board lately is going in the direction of the Atheist board with it's personal attacks, intolerance and even hatred, reminding me on (not only) me constantly picking on Divi & King on the old board (something I am not proud of), but even more malicious.

Disagree with Jim's non-Berkshire suggestions is not disrespect, it is disagreeing and only that.

As far as suggestions, given the old board and this new one, I've been hyping the insurance brokers AJG and BRO for 25 plus years. Instead? We go to things like Amazon and Tesla, then to Dollar General and CarMax.

It is what it is, nothing more.

The board for the most part is excellent with Berkshire stock and Jim leads that charge with skills and success. Elsewhere? The stocks the board obssesses over are royal frigging disaters.

But not those insurance brokers. Life is great...if you can stand it.

Are we here to make money? Or is that just a sideline to subgroups forming to play sides?

Dealraker (typically) : Elsewhere? The stocks the board obssesses over [Amazon and Tesla, then to Dollar General and CarMax] are royal frigging disaters.


Yeah. Especially if you take the long view, Tesla's 50%/year CAGR over the last 5 years is indeed a "frigging disaster". BTW, that sounds so much sexier when Marisa Tomei says it in a fantastic New York accent.

Much better to have 25%/year from AJ Gallagher over the last 5 years, now THAT is something worth paying attention to.

You know, or not.

R:)

Years ago I joined on an OT stock touted as a diversification from BRK in the energy sector, Oil & gas some kind of way, and for me it was indeed a "frigging disaster". My own doing to invest in it, not blaming anyone, but I do see some similarity with DG in maybe a quickness to discredit arguments of those not on board even as disaster unfolded.

I am in on DG, initial lot of 30 shares at 155.62 on 8/24 and a second lot of 25 shares at 132.50 a week later on 8/31, waiting to add $2,300 more and I'm fine with giving it a few years. The issue bothering me most is the evident policy of competitively underpaying DG workers which appears to me to be counter-productive with few staff per store.

Buyer beware! do your own research, valuation and thinking and don't rely on others. I get ideas from here, super investor lists, screeners and investment discussion groups. Once I've run the slide rule over them reviewing on Macrotrend and Dataroma (trends and metrics) I review and think about the business model. 1 in 10 I look at I like, then and and only then do I buy if the valuation looks good.

I first learnt the lesson buying Research in Motion (Prem Watsa) back in the day, learnt it again with Alliance Data Systems (here) and again with Alibaba, (Charlie Munger and Ray Dalio) the first two were tiny stakes. Alibaba is bigger but I'm comfortable having averaged down, what I do look for is far more conservative valuations and margin of safety so it's a screaming buy vs so so.

My posts are about insurance brokers, particularly AGJ; Norfolk Southern; LHX, and a few more. And my post was about not thinking DG was something the board should be obsessively focused on, just as I didn't think years of KMX was something the board should lock down on.

Mostly my posts are that I think Jim is simply outstanding with the Berkshire business and stock price. But anyway in the end we all got slaughtered, some like me reputationally and some financially.

It is what it is. Life is great, if you can stand it. In the end the things I protest? Well, the outcome for all of them thus far says, "Well, maybe we should have accepted the other side of the chant." But we didn't.

I did mention once that the Berkshire board, led by of course Jim, was outstanding with Berkshire and generally terrible elsewhere. It was evidence based, not personal towards anyone.

my post was about not thinking DG was something the board should be obsessively focused on

Read those posts and you'll find the very simple and for me completely acceptable reason: Here DG talk started, here more and more people followed into DG, started positions, doubled down, are thinking about doubling down again or, if having super-clever timing (Rayvit), are waiting for their buy limit to be reached. HERE, not "somewhere out there", many people accumulated more and more DG stock the last weeks, or - read the posts "which Calls do you buy?" - are even leveraged with time running out eventually.

Many Berkshire board members here apparently are focused on DG as it became an ever greater and highly dramatic investment for them during the last weeks. A perfectly good reason, isn't it?

I'd say the Berkshire board is going to follow Jim and whatever he's promotion is going to sell well. That's about as deep as it gets.

I'm sure Jim could make up a post of completely irrational ideas, and maybe a few stocks that subsequently plummet, and the board would go all in. It is what it is and boards with the like tab are natured this way.

Some of us just enjoy watching...and occasionally protesting.

"I'm sure Jim could make up a post of completely irrational ideas, and maybe a few stocks that subsequently plummet, and the board would go all in."

I've generally found that these kinds of insults, and this general way of viewing the world, say more about the author than the world around them.

There are plenty of intelligent people on this board, with a capacity for critical thinking and reflection. Jim has raised quite a few ideas over the years. Some turned out well, others didn't. Some ideas appear to have gained a lot of traction, others didn't (as best I can tell). I've picked up two or three non-BRK ideas from Jim over the years, and entered into them after my own due diligence. My returns to date on these Jim-inspired holdings are market-beating -- I'm not complaining.

You're unwillingness or inability to see the board as a multi-faceted forum with real, intelligent human beings on the other end isn't a Jim problem, or a problem of a bunch of dim bulbs following a leader. It's a you problem. And it's a far greater intellectual failing than the one you think you see in others.

I'm sure Jim could make up a post of completely irrational ideas, and maybe a few stocks that subsequently plummet, and the board would go all in. It is what it is and boards with the like tab are natured this way.

Some of us just enjoy watching...and occasionally protesting.

Dealraker, I for one - am fed up with these kinds of comments from you. You are only showing your frustration that people don't pay more attention to yourself. He contributes. I thought you were beginning to try to do so, but then you return to bitching.

Get over it.

I almost never make this kind of post. But I keep hoping you might contribute something worthwhile, so I don't put you on ignore. But you don't change.

And age isn't an excuse. I'm older than you are. I was just taught better manners.

I agree fully with Lear, I agree more than fully with Texirish - - - but I also see another side:

There are plenty of intelligent people on this board, with a capacity for critical thinking and reflection ... You're unwillingness or inability to see the board as a multi-faceted forum with real, intelligent human beings on the other end isn't a Jim problem, or a problem of a bunch of dim bulbs following a leader. It's a you problem.

This is correct - and wrong! In other words: Too simple (as judgements usually are; the world is more complex).

While there are numerous intelligent people on this board, able to to their due diligence in investing, there are also numerous "dim bulbs" like myself when it comes to that. Intelligence doesn't give you the skills required for good investing (otherwise Buffett wouldn't stand out).

Lacking those skills (and you can't just aquire all kinds of skills, to say that would be too simple again) many of us do indeed "follow the leader" and have no way to assess how good or bad his ideas are. It's the most natural thing to follow someone you think is superior in a certain field. That's what experts are for. To be critical regarding their assessments requires a lot of skills and knowledge not everybody has or for various reasons cannot aquire.

If you don't see that there is this big group here (I include myself, having followed - uncritical, as I can't really assess DLTR, KMX or DG - Jim several times now) you contradict your own words of this being a "multi-faceted forum".

One more thing: I fully agree with Dealraker when he says this:

I'm sure Jim could make up a post of completely irrational ideas, and maybe a few stocks that subsequently plummet, and the board would go all in.

That is because of 2 reasons. One is what I tried to explain: Many of us, though intelligent, nevertheless have good reasons to, yes uncritical, follow the compared to us superior expert.

The other is what Dealraker often mentions: The cult thing. It is a cult indeed. Just analyze the rec's Jim's posts get in relation to their content. It's very interesting. You'll find that as deeper the content of his posts as more rec's they get. As it should be. But you also notice that his "non-content" posts get rec's too. It's practically impossible for him to post without getting rec's, even if the whole content would be "Hi."

And that's the cult thing Dealraker mentions. That there is applause for the Guru's "Hi." post while there is none or less for the non-Guru's posts even when they contain content. That's not an objective thing, it's a Guru thing. Dealraker is absolutely right with that.
---------

Let me end a far too long post with a personal word: I too often stated contrary opinions here which are "blown into the wind", at best not interesting for the people here, at worst seen as attacking someone personally (Here: Lear, Texirish, Jim) while they are just meant to criticize not the person but something they said I found too simplified and/or single-sided, trying to see the other side.

I just can't resist if I see something I thing has to be corrected, can't keep my mouth shut. A big flaw and I am I am tired of that myself. So as with my post about my huge selling, with had the purpose to "keep myself honest" by having openly stated that here, I hereby openly say Goodbye to posting my contrary opinions and will try to only post if a have a question. I hope I can adhere to those intentions at least for a while.

Good morning all, just a thought. I know for a fact that from early 2000 there were several posters on the yahoo board and the fools board who utilized multiple IDs. They rec their own posts many times and give multiple thumbs down to others. One nut on the brkb , yahoo board , is still there posting with multiple IDs. I have no idea what others can do on this new board or if multiple IDs can be policed or would be allowed? Anyway, there are many posters with, serious , health issues, to be kind. 🙏

I have no interest in DG. I ignore the DG posts. I am not a quant. I (mostly) ignore the detailed analyses of peak book and ratios. I don't trade options or LEAPS, whatever those are. I enjoy hearing how people approach investing problems and what information they consider important in evaluating ideas, and when to enter and exit positions. I enjoy the discussions of investment as one aspect of life, and how to approach it that way. I enjoy the discussions about wealth and what it means and how it affects one's life. And of course I love the discussions of BRK and how it has changed over time to meet new challenges and take advantage of new opportunities.

I assume everyone is here to share ideas, compete a little, and learn. Some are show-offs, some are obnoxious. Most are not. CrankyCharlie is in a class by himself, but I don't mind. It's all good.

If we're are going to have pointless arguments, I'd rather argue about whether Warren's kids should be on the board or not. That one still bothers me.

abromber

"If we're are going to have pointless arguments, I'd rather argue about whether Warren's kids should be on the board or not. That one still bothers me. "

As it should. Terrible nepotism. Shameless really

It is normal to avoid thinking about the obvious. But you have a guy living in Monoco advising you on a business or even a complete life environment he's never seen or stepped into. A business that's dependent on fixed income generally very low income people making what's often impulsive/indulgent/non-essential purchases.

Any chance, if and when you can stop looking at past charts, stats, and making fun of those saying "Wait...look...", that you actually fathom the first paragraph? Stressed consumers, those expriencing these higher interest rates, actually do make logical decisions.

Apologies all for adding to the useless distraction. I know better, but had a lapse of judgment. I'll use the ignore function more liberally going forward.

Said: I agree with much, albeit not all, of what you said. I don't view it as an attack, or anything close -- you present your argument with reasons, and many of the points made have some credence, or should be on the mind of those using a forum for investing decisions.

<It is normal to avoid thinking about the obvious. But you have a guy living in Monoco advising you on a business or even a complete life environment he's never seen or stepped into. A business that's dependent on fixed income generally very low income people making what's often impulsive/indulgent/non-essential purchases.
>

I think others on this board are saying is that you can keep such thought to yourself.

<Any chance, if and when you can stop looking at past charts, stats, and making fun of those saying "Wait...look...", that you actually fathom the first paragraph? Stressed consumers, those expriencing these higher interest rates, actually do make logical decisions.
>

Such statement makes more sense and is welcome.

As a rule of thumb, when Dealraker makes a post that doesn't include any reference to Jim, the post is high quality and helpful. But the ratio is probably 1 of those posts for every 2 where he just can't help but make an attack. I'm also befuddled by the lack of self awareness.

The amount of mindspace he gives Jim is amazing. For someone who doesn't want Jim to be defining his experience participating on this board, he finds a way to reintroduce some reference to Jim on his own at the very point when it seems like he might be ready to move on.

I also personally find it annoying that he refers to the "board" as if its one entity. We are a diverse collection of people, who are fully capable of deciding on their own who they want to listen to, what we find valuable, and what moves we decide to follow or not.

Can we move on to talking about substantive topics?

"But you have a guy living in Monoco advising you on a business or even a complete life environment he's never seen or stepped into. A business that's dependent on fixed income generally very low income people making what's often impulsive/indulgent/non-essential purchases."


Mr. Buffett is famous for not having visited or even having seen the operations of most businesses he has purchased. In the talk at the University of Florida in 1998, he was speaking about his (then recent) purchase of Gen Re and joked "I hope the business is there" to the crowd's laughter :-)

By that logic, should we stop listening to Mr. Buffett as well?

WEB invested in businesses he understood. For a retail shop, visiting is an easy way to better understand the business. I am not a fan of the DG business model (selling unhealthy food to poor people), and so would never consider investing in DG. I have never been inside a DG, but have been to Family Dollar and Kmart stores that probably are similar. The Family Dollar and Kmart stores I visited are now closed, and have been replaced by higher quality stores. This reinforces my reluctance to even consider a DG investment.

=== link ===
Buffett's 2007 Letter to Shareholders
"Let's take a look at what kind of businesses turn us on. And while we're at it, let's also discuss
what we wish to avoid.

Charlie and I look for companies that have a) a business we understand; b) favorable long-term
economics; c) able and trustworthy management; and d) a sensible price tag...

Our criterion of 'enduring' causes us to rule out companies in industries prone to rapid and
continuous change. "
https://www.berkshirehathaway.com/letters/2007ltr....

The top 30 publicly-traded U.S. and Japanese stocks owned by Berkshire Hathaway:

          company             Symbol   Pct of portfolio
         Apple Inc             AAPL         46.20%
    Bank of America Corp       BAC           8.20%
  American Express Company     AXP           6.70%
        Coca-Cola Co            KO           6.60%
    Chevron Corporation        CVX           5.90%
 Occidental Petroleum Corp     OXY           4.10%
      Kraft Heinz Co           KHC           3.20%
        Moody's Corp           MCO           2.30%
      Mitsubishi Corp        8058:TYO        1.70%
        Mitsui & Co          8031:TYO        1.40%
    Itochu Corporation       8001:TYO        1.30%
        Davita Inc             DVA           1.00%
        BYD Co. Ltd            BYDDF         0.90%
          HP Inc               HPQ           0.90%
       Citigroup Inc             C           0.70%
         Kroger Co              KR           0.70%
       Marubeni Corp         8002:TYO        0.70%
      Verisign, Inc.           VRSN          0.70%
       Sumitomo Corp         8053:TYO        0.60%
          Visa Inc               V           0.60%
Charter Communications Inc     CHTR          0.50%
      Mastercard Inc            MA           0.50%
  Activision Blizzard Inc      ATVI          0.40%
      Amazon.com, Inc.         AMZN          0.40%
          Aon PLC              AON           0.40%
Capital One Financial Corp.    COF           0.40%
 Liberty SiriusXM Series C     LSXMK         0.30%
  Paramount Global Class B     PARA          0.30%
       Snowflake Inc           SNOW          0.30%
    Ally Financial Inc         ALLY          0.20%

Mr. Buffett is famous for not having visited or even having seen the operations of most businesses he has purchased. In the talk at the University of Florida in 1998, he was speaking about his (then recent) purchase of Gen Re and joked "I hope the business is there" to the crowd's laughter :-)

By that logic, should we stop listening to Mr. Buffett as well?




No, Buffett makes a very good point. Sometimes that site visit is what stops you from making a great investment. For instance, there are companies (I'm thinking of one in particular) that I would be quite unlikely to visit myself as a customer: as rationalwalk points out, it makes a lot more economic sense to buy at Walmart or Costco than at a dollar store, if you are like most of us and have a car, a big fridge and freezer, and no worries about spending a lot of money for a huge amount of stuff at cheap prices. But despite being pretty frumpy stores, financial statements will tell you that, for some mysterious reason, they have been pretty consistently profitable for decades, the filth and squalour and the low quality of the goods notwithstanding.

If you do want to visit the stores, then visit them when the share price is high, and visit them when the share price is low, and try to see if there's any difference. You'll probably conclude that that filth and squalour and low quality has been there for decades.

But the worst thing to do is to visit them just when the share price has swooned, and to argue yourself out of the investment just because you don't personally like the stores very much. Who would shop there, after all? The answer is, lots of people that have different standards and different constraints than you.

dtb

I am not a fan of the DG business model (selling unhealthy food to poor people), and so would never consider investing in DG. I have never been inside a DG, but have been to Family Dollar and Kmart stores that probably are similar. The Family Dollar and Kmart stores I visited are now closed, and have been replaced by higher quality stores. This reinforces my reluctance to even consider a DG investment.


We here are not the main clientele of Dollar stores. It's rather weird to think that just because we (you) turn up our (your) nose at Dollar stores that they are a failing business.

How the heck do you imagine that, for example, Dollar Tree manages to stay in business? Clearly they have plenty of customers. Even if none of their customers own hundreds of shares of Berkshire Hathaway.

I would suspect that even multi-billionare WEB shops at DG & DT & FD occasionally.

Thought that all the DG posts got moved over to the DG board.

I recommend we stop using repostings or postings with subject matter that includes the word "Dealraker".
The attention that he gets from seeing his user name in the subject headings frequently is one of his needs and motivations
for posting his negative comments about other major contributors to this board.

Listen, I get it that you like dumping on me for reasons no-one can quite figure. Everyone needs a hobby.

You know nothing about me or my background.

Jim, I wish I could recommend your post more than once!!

I think Dealraker insults this entire board when he opines that people follow you mindlessly into investment decisions. I haven't run into any Berkshire investors, or even those interested, who aren't intelligent thoughtful folks. BRK shareholders do seem to self-select themselves. That doesn't mean all of us are skilled investors, but we know enough to learn from others. The old AOL board and the people I got to know through that are why I became a Berkshire shareholder. And I try to share what I've learned in later years to pass on their support.

And he underestimates where many of us have come from. How many of us inherited Berkshire shares?

I'm one with a background similar to yours. I was born in the middle of the Depression. Early years were spent on a very small rural farm. No electricity or running water. Outhouse down the hill. Heat was one fireplace and a wood stove. I, my two brothers, a first cousin, my mother, and my grandmother shared her small home - circa 600 ft2. We grew or killed 90+ percent of what we ate. And sewed shirts from from flour sacks. Hand me down clothes were the rule. Things got better during WWII.

I started full time work at age 12, the same year I started high school. Worked at a drugstore from 4-8pm after school, 12 hours on Saturday and 8 hours on Sunday. Back then you were either a child or an adult for many people. Thank goodness there were no child labor law restrictions. Made enough to support myself and help my family. I've always been grateful for having that job.

Graduated high school as valedictorian but no money for college. Knew that an education was the key to a better life for my family and myself. Mom found me a summer job as bellhop on the Gulf Coast. Worked 12 hour/7day a week. Made enough to attend a junior college and even the first year of senior college. Borrowed on my word only to get through the second one. Ane repaid it. Took all my chemical engineering course in two years - 20-21 hours a semester, almost all STEM. Was elected to national honor societies, and succeeded in getting a job with Exxon. Life changed after that. Two of the hardest years of my life, but they paid off.

I have found very, very few assholes on the various BRK boards. But you do run into one every once in a while. And they never seem willing (or able) to listen to others.

And the like tab...once again, heats up. My guess is almost all of you will make your best investment decisons when in a room alone and not online in an investment forum.

As for the asshole designation? I'd give it to the passive aggressive guy who pens a 20 page arrogant return on equity elaboration when the stock picks all go down the drain.

I actually appreciate what appears to be his first up-on-board comment that I've seen. Keep it up Jim, it is the real you, not the cutesy stuff you put here.

All humans seek status with their peers, tell stories, and imitate. Be careful who you imitate as far as investing.

<As for the asshole designation? I'd give it to the passive aggressive guy who pens a 20 page arrogant return on equity elaboration...>

No, it's most certainly you.

Please get help Dealraker.

Surely you must feel the collective contempt this board feels and that cannot land well inside you.
If you value being part of this board/community, please find and cultivate some decency & contrition.
Absent some near term conversion, you will very likely be muted "en masse" ... that would be a shame.

I surely don't speak for anyone else, but I have a feeling the door is still narrowly open.

CmoreBmore


P.S. There are galaxies that cannot match the vast patience Mungo has shown you.
I worry a bit that you miss something so obvious.

You mistook kindness for weakness. He drew the line at his family.

I like seeing lots of 'like' on any post, which means the board is active, people are willing to share ideas, and occasionally I do benefit from it. Even though I rarely finished reading long posts and didn't know they were liked.

I don't check in very often, and I post even less frequently these days. Life's recent challenges have taught me that there are far more important things to spend one's time on than chat boards.

I've always enjoyed your posts, deal, especially your focus on how a slow and steady approach to investing has served you well. I enjoy Mungofitch's posts as well. You each offer different things. Yours remind me of grandpa's comforting talks about life and the roads best taken. Jim's tend to be more educational than philosophical, which is the primary reason I've frequented these boards all these years.

Jim's ideas have been hit or miss over the years, but when they miss you can usually see why in the progression of the assumptions he clearly articulates. Carmax is flat for me, but I expect the idea to work out. DG is retail, so I've avoided it. Been burned by retail in the past. I've been buying tech when it bottomed recently'GOOG, amzn, adbe and meta to name four'and they've worked out well relative to many of Jim's suggestions. But who cares?

Your philosophical posts, while valuable, don't really help in finding the nuggets many of us are panning for around here. In fact, if I share one complaint with you it's that the board doesn't see as many value investment ideas floated as once happened on the old fool board. It would be nice if the board embraced idea vetting once again.

Having said this, I'm just wondering why the board posting trends have gotten so under your skin? Post ideas if you have them. Back them up with sound equity analysis. I know I'd be interested. Otherwise, take a hike with your wife, enjoy the life force that flows through us all, and don't worry about what the cool kids are doing.

Phil

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