Thank you for your input, Jim. Just to be clear, I was using nominal P and BV. I agree that the growth rate of BV can change at any time. Historically there have been three, fairly distinct periods of growth: a lumpy period from 1965 to 1979 at a CAGR of about 15%/yr, a fairly straight line (exponential) period from '79 to '99 at a CAGR of 27%/yr and a fairly straight line period from '99 to '24 with a CAGR of 10%/yr. The next period could be lumpy or straight line (exponential), and with an unknown CAGR. However I am encouraged in the analysis that the trendline (log-log) of P versus BV continued to be straight through the two knees in BV and P versus time in 1975 and 1999. Still, as you point out, we need to be cautious about putting too much trust in the trendline remaining straight (log-log). Further, to bolster your point, the trendline changes with the starting date of the regression, so this analysis needs some way to determine the best starting date.

Thank you again for your input.

rrr12345

Berkshire Hathaway FAQ

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