Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 1
why the stock is trading so well? Thank you.
No. of Recommendations: 18
Two factors
Main one: market go up. If you're looking for a rational explanation of that, don't ask me.
Secondary: Berkshire's period of underperformance that started in mid April ended around two weeks ago and reverse. So at the moment, Berkshire goes up just a bit more than whatever the market does.
Berkshire is trading at almost spot on $500 per B share.
That's about 20% (1.72 standard deviations) above its average valuation level in the last 20 years, using the "smoothed real value per share" sort of view. I can post a graph if anyone is interested.
The current rally might go on for quite a while (or not, beats me). But I wouldn't count on the high prices lasting all that long.
Jim
No. of Recommendations: 2
Main one: market go up.
I don´t buy that. As I pointed out repeatedly and was easy to see too often this year Berkshire moved exactly opposite to the market. Then the explanation always was "Flight to safety" respectively "Berkshire is boring, the magic and momentum is in the high-flyers". Explanations which made sense, contrary to this one now.
No. of Recommendations: 0
I think Jim might be preparing a 550$$ bid for it all, in bitcoin. Yahoo.
No. of Recommendations: 3
“I can post a graph if anyone is interested.”
~~~~~~~~~~~~
Always enjoy reviewing your chart & then telling my kids to stop checking their accounts & wait 2 yrs for the real value to be $500 :)
ciao
No. of Recommendations: 1
Gates Foundation buying Brk significantly in the last qtr. Holding up 40%
No. of Recommendations: 1
Otherwise just continued buying from indexes as people are conditioned to buy the dip and the bigger BRK becomes (market cap) the greater the weighting it has?. This doesn't rely on an assessment of valuation.
No. of Recommendations: 9
Otherwise just continued buying from indexes as people are conditioned to buy the dip and the bigger BRK becomes (market cap) the greater the weighting it has?. This doesn't rely on an assessment of valuation.
Sounds right. I think that explains maybe 80%+ of the price moves in Berkshire this year: mainly index trackers and closet index trackers and the forces that drive them. Probably the best explanation most of the time, for that matter.
This year, the other 20% of the explanation was pretty obvious: a time limited flight to safety. (and as with any move, amplified by momentum players)
Around the third week of February, the broad US market started falling but Berkshire started rising, a spike in relative-to-market performance.
Then the panic then subsided in mid April and both trends reversed and completely unwound. The broad market did a bungee rebound, while Berkshire's price faded back again. That lasted till the first week of August.
Back where we started. Berkshire's price return is now the same as the S&P starting from Jan/Feb before the up-and-back-again.
Jim
No. of Recommendations: 4
"Then the panic then subsided in mid April...""Panic."
Great description. Many here were victims.
“If you can keep your head when all about you are losing theirs . . .
If you can wait and not be tired by waiting . . .
If you can think – and not make thoughts your aim . . .
If you can trust yourself when all men doubt you . . .
Yours is the Earth and everything that’s in it.”https://www.berkshirehathaway.com/letters/2017ltr....
No. of Recommendations: 6
Gates Foundation buying Brk significantly in the last qtr. Holding up 40%
Ummmm... Let's not call that buying. Warren sends them the shares and they sell. But he does send them a bunch of shares once a year.
No. of Recommendations: 17
"Panic."
...
Great description. Many here were victims.
It's probably fair to say that panic is never useful.
At the same time, it's also fair to say that being bullish at all times is foolish.
In spring 2000 I figured I had better things to do with my money than be long a broad equity index, and the S&P 500 had zero real total return for the next 13.1 years. Today rhymes just a little bit, and presumably there is a reason that the $325bn of cash isn't burning a hole in Mr Buffett's pocket...if there is any good time for just a pinch of panic, it's probably at market tops, not market bottoms.
Jim
No. of Recommendations: 1
Around the third week of February, the broad US market started falling but Berkshire started rising, a spike in relative-to-market performance.
Of the top 10 holdings in the S&P 500, 8 are tech firms, one is a bank, and one (BRK) is a conglomerate.
When/if the tech bros crash, BRK and JPM will be the shining stars.
No. of Recommendations: 4
No. of Recommendations: 13
https://www.dataroma.com/m/hist/hist.php?f=GFT&s=B...
That explains the pattern. No, it's a myth. Those sales are entirely irrelevant to the market price (other than the precise minute of the sale). Why do people believe it matters?
Their sales don't sway the price more than anyone else selling does. Every transaction has a buyer and a seller. No, wait, maybe the buyers of the foundation shares are pushing the price higher than it would otherwise be...?
Just kidding.
The thing to realize is that capital goods (paintings, beanie babies, bitcoin) are not like investment securities. The price of a capital good is set by supply and demand. But, not understood by many people, the price of a purely investment security is NOT set by supply and demand. (not past the time frame of the window covered by willing liquidity). Berkshire has plenty of liquidity, so the sales don't affect the price trajectory past the interval that the sale took place. Rather, the price of a financial security is set by the consensus expectation of financial return.
The same old example still works: if you're selling a bag with a hundred $100 bills in it, it doesn't matter how many bags you have for sale, the bids you get won't change.
What matters is not the quantity on offer, but the perceived value of the next bag.Or take a longer term example: does the $100 billion (or whatever the number is) already sold by the foundation mean that the fair P/B is now 1.4 instead of 1.5 or similarly lower by whatever metric you like? No, a share of the company is still worth whatever it's worth, so the price today is unaffected by the foundation sales in the past. The foundation sales don't matter.
The only way the foundation sales could affect the price is like this: some fraction of the investor population who might consider buying or selling Berkshire erroneously believe that the foundation sales affect the price meaningfully, so that makes a change to the weighted average opinion of where the stock will go next. That weighted average opinion determines the current trade price in the short term. In this case the change would be microscopic, but it could happen. Still has no effect over longer time frames.
Jim
No. of Recommendations: 2
In spring 2000 I figured I had better things to do with my money than be long a broad equity index, and the S&P 500 had zero real total return for the next 13.1 years.
Today rhymes just a little bit, and presumably there is a reason that the $325bn of cash isn't burning a hole in Mr Buffett's pocket...if there is any good time for just a pinch of panic, it's probably at market tops, not market bottoms.Warren Buffett Indicator hits 215%, the most expensive stock market valuation in history?
https://www.nasdaq.com/articles/buffett-indicator-...
No. of Recommendations: 2
"That explains the pattern"
I meant once a year they receive their shares from Berkshire and it shows up as an "add"....not that they've been in the market buying.
Rg 2025 Q2 2024 Q2 2023 Q2
No. of Recommendations: 9
Warren Buffett Indicator hits 215%, the most expensive stock market valuation in history?
There are some folks (mostly sell-side people at brokerages) that would like to pick holes in the indicator. But, yeah.
It's one of those "better to be approximately right than precisely wrong" things. Even with quibbles, clearly US equities are in aggregate very much more expensive these days than at most other times in the past.
Technically speaking that doesn't say what valuations will be like in the future, but to the extent that things rhyme with history the likely forward returns will be poor. Starting today, ending at (say) any date that's at the average valuation level in the next 20 years, whatever that may be.
The biggest danger to valuations would be if net profit margins fall back even partway towards the historically normal range. Oddly enough, I don't think we'll see much of that, since vast corporate profits are to a large extent the macroeconomic flip side of vast budget deficits. And nobody who's looked at the numbers expects those to get smaller in the next few decades.
Jim
No. of Recommendations: 2
"No, it's a myth. Those sales are entirely irrelevant to the market price (other than the precise minute of the sale). Why do people believe it matters?"
Sorry jim, but it matters. When shares are sold from a, control block, the, issued and outstanding, remains the same, BUT, the Float increases. How many Bs have all the Foundations sold since 2008? How much has the, float, increased since 2008?
Thank you.
No. of Recommendations: 5
Today’s “Berkshire Beat” interview with Merkel’s Tom Gayner.
“Buffett deserves every bit of credit and acclaim for what he has done,” said Gayner, “but also part of what he designed and part of what he was doing all the way along was to design Berkshire in such a way that it would be able to persist beyond his personal tenure there. And that’s what we’re seeing now.”
A good read regarding comparisons to BRK etc & latest notes out of Omaha,
https://www.kingswell.io/p/the-berkshire-beat-augu...ciao
No. of Recommendations: 2
“Berkshire is trading at almost spot on $500 per B share.
That's about 20% (1.72 standard deviations) above its average valuation level in the last 20 years, using the "smoothed real value per share" sort of view. I can post a graph if anyone is interested.”
Yes, I would be interested in the graph! Seems like a not unreasonable time to trim a bit, so I just did an every few month trim a BRKB (basis of $280 from Fall ‘22, currently $505) for upcoming quarterly taxes & life expenses. Anyone else trimming here into a bit more strength?
No. of Recommendations: 0
“Markel”! 🤬
No. of Recommendations: 0
That's about 20% (1.72 standard deviations) above its average valuation level in the last 20 years, using the "smoothed real value per share" sort of view.
It seems now might be a good time to buy-to-close my Berkshire puts. They've lost about 60% of their value, so I can buy them back at 40 cents on the dollar. If Berkshire starts getting cheap again, I should be able to sell some again. I don't mind holding them to the end and getting Berkshire shares for $450 6 months from now, but it seems less likely to happen now that the price is higher.
No. of Recommendations: 5
I 100% agree that the price of Berk past any very brief period of time isn't related to the selling of the Gates foundation. The price of Berk, regardless of the Gates foundation, outside of any incredibly short time period - is going to be at prices that investors sense it is worth given its current value via future outcome/earnings or whatever.
Over on the COBF forum we have a guy who is very much into St. Joe and any time the price falls it is - in his view - always that Bruce Berkowitz' Fairholme is selling the stock. Fairholme owns of course a lot of St. Joe and it seems at times Berkowitz is forced to sell from investors leaving his fund.
Then of course Fairholme quits selling and the price of JOE doesn't move for lengthy periods or continues to go in the wrong direction for the complaining poster's logic. And of course with JOE continuing to sell well below when the complaining began ---- nothing is written or discussed about Berkowitz/Fairholme for long periods.
No. of Recommendations: 1
The khc news is bullish tho not that material.
No. of Recommendations: 2
" I 100% agree that the price of Berk past any very brief period of time isn't related to the selling of the Gates foundation. The price of Berk, regardless of the Gates foundation, outside of any incredibly short time period - is going to be at prices that investors sense it is worth given its current value via future outcome/earnings or whatever.
Over on the COBF forum we have a guy who is very much into St. Joe and any time the price falls it is - in his view - always that Bruce Berkowitz' Fairholme is selling the stock. Fairholme owns of course a lot of St. Joe and it seems at times Berkowitz is forced to sell from investors leaving his fund.'
Good morning Jim, since you and I have been debating this issue for 20 years this is a perfect example of relevance. Fairholme Fund is 78 percent JOE. Fairholme owns about 40 % of Joe issued and outstanding, or 23 million shares. In your opinion, IF Fairholme sold 500,000 shs in sept, would that be more relevant than any other long selling 500,00 shs?
Thank you to anyone else who wishes to opine.
No. of Recommendations: 1
It seems now might be a good time to buy-to-close my Berkshire puts. They've lost about 60% of their value
Mine are similar, but I don't know if it is worth buying them back ... may as well wait for them to expire worthless. And if something bad happens meanwhile, well, I'm more than willing to buy shares at $400 (minus whatever premium I received back then).
No. of Recommendations: 13
It seems now might be a good time to buy-to-close my Berkshire puts.
Not that anyone cares, but my magic 8 ball suggests higher prices in the short term.
Berkshire is currently rising faster than the S&P, and those relative-to-market trends sometimes last months. And the S&P is still on a tear, generally speaking.
Jim
No. of Recommendations: 0
What's the diet you feed your magic 8 ball with? Purely momentum? Does it take into account that probably many Berkshire shareholders (probably not only here) take fundamentals more into account than glorious 7 shareholders and see it as being expensive again, being tempted to now or soon if it continues it's move upward to sell into this opportunity, especially the ones that missed that before and now regret it?
No. of Recommendations: 1
“What's the diet you feed your magic 8 ball with?”
———————————-
Type in……….”is Berkshire Hathaway stock going to continue to rise”
& hit the Shake Again button…
https://magic-8ball.com/ciao
No. of Recommendations: 11
What's the diet you feed your magic 8 ball with? Purely momentum?
That and fresh newt entrails.
Sure, fundamentals matter more than anything, more than everything else combined...eventually. Shorter term, yes, I think momentum is the best approach to haruspicy : )
I was also taking into account that "party like it's 1999" mood in the markets. A rising tide lifts all boats, even those that are actually seaworthy.
Jim
No. of Recommendations: 1
I was also taking into account that "party like it's 1999" mood in the markets. A rising tide lifts all boats, even those that are actually seaworthy
I think to remember it was different then, that Internet stocks did rise and rise --- and Berkshire went lower and lower. I bought my very first share of Berkshire the day Cramer yelled (March 2000 or so? I would have to look up the date of my first Berkshire buy):
"Berkshire Hathaway? There is only one thing to do: Sell! Sell! Sell!" (Thank you, Jim Cramer).
Which btw is not completely different from what I noticed so often this year: That the daily moves of S&P vs. Berkshire were exactly opposite. One of the reasons why I doubt they now move in tandem for much longer than the 1 month since that is the case. Too many rational Berkshire investors will sell when it continues to become even more expensive.
