No. of Recommendations: 42
Interesting about “your wife’s IRA”. I put my wife’s IRA literally 99% in BRK. She rolled over $5 or 6K from her dental assistant job when she chose to be a stay-at-home mom when we, then, lived in Omaha— A place we moved to, reluctantly lol, for my employment, which led me to interactions with Buffett in 1987. I told my wife her IRA assuredly would have the best return of all of our accounts because it would be fully invested almost forever and untouched til retirement. Hasn’t put a nickel in it since then—it’s $655k. And my prediction so far is right, comfortably (you can see my personal investing prowess has brilliantly contributed what I forecast: some limited SUBTRACTION from holding Berkshire and napping—in line with what looks like quite similar results from folks here & most other mortals)
Also, this week was an even more significant time…my “100X day”. Bought my first BRK for $6,950 (I really got ripped off: BRK, OTC, had a $200 bid/ask spread $6,750/$6,950 so course you get filled at $6,950 plus $40). 100 X later—$699,000. I’m obviously grateful though not surprised. I estimated in 1992 a share of BRK would hit $1 million by my age 72. I’m 65 1/2. 32 years later my forecast is still the same. It’s said investing is exact opposite of weather forecasting: LONGER you go out in time the more accurate the forecast. Meteorologist Charlie Munger knew this.
Also, re: dramatic moves in Berkshire stock. BRK has a HISTORY of brief radical strong up moves and seemingly years of long stagnation. This was even more pronounced pre 1995 or so..and later, pre Index inclusion. I remember it traded below a $10,000 “wall” it felt like forever. Then out of nowhere it exploded from about $9k to $12k and I had serious selling temptation. Well, the next $685,000 per share of upside mattered lol. Also BRK traded WAY WAY above intrinsic value at $16,000 per share after trading regularly at 20-25% BELOW intrinsic value before..and AFTER!!. That price REALLY felt far more tempting to unload compared to now. It was a lot more expensive. The stock has also had extreme gyrations around big round number prices since then.These were lessons for me. I wanted to share to you more recent stockholders. What DRIVES intrinsic value is the secret sauce for a machine like this. If you already own it, you want to keep it.
As for attractiveness I posted a few weeks ago that Warren was buying the stock all-in after tax for $410/share. As I said then, he only buys at a substantial discount to intrinsic value. In my simple world 10% discount is the cheapest definition of substantial. And don’t be fooled with P/Book comparisons historically with a company that’s morphed into a collection of operating companies which Buffett has said SHOULD trade at higher multiples by definition. Some of you with sophisticated options strategies told me you wanted $390. I wanted that too. And you guys probably could have made some dough buying Puts at $16,000 lol—that’s a tougher game, but it’s a GAME. On the big picture I suggest following BUFFETT on the business and the valuation. I did that 37 years ago. My biggest challenge: avoid temptation.
As Charlie and Howard Marks say “ it’s simple. But it isn’t easy”
