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- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 14
Thankful for Warren and the culture he has created here and everywhere.
Happy Thanksgiving to you all.
No. of Recommendations: 5
Amazing.
Happy Thanksgiving to all and hopefully he is with us for a long time
No. of Recommendations: 19
New All Time Highs
Back in the trillion club. Though the price is actually still trailing the insurance sector lately, the mood is good.
But the forward returns possibly less so.
At today's high price so far, $491.67 per B share, the most plausible short to medium term outlooks are not so great.
Assuming (say) book grows at a nominal 10.3%/year made up of a pretty typical 7.1%/year real growth and 3.2% inflation, and market multiples average around 1.4 times book, the next three years would get you a real return of inflation + 1.3%/year.
I love the firm, but I wish it were cheaper so I could really reload in a big way.
Nobody minds if I wish for a price crash? Just a short one, I promise!
Jim
No. of Recommendations: 6
I love the firm, but I wish it were cheaper so I could really reload in a big way.
Another side effect of current price levels is that buybacks are no longer on the table for awhile.
No. of Recommendations: 3
Jim,
I'm all set to back up the truck on a crash too. lol
No. of Recommendations: 3
From Corner of Berkshire and Fairfax:
It looks like the strong reinsurance results may continue through 2026.
https://www.insurancebusinessmag.com/ca/news/reins... The global reinsurance sector is poised for strong earnings growth between 2024 and 2026, building on robust results in 2023, according to an analysis by S&P Global Ratings.
Key drivers include decade-high investment yields and consistent rate increases in property and property catastrophe lines, supported by structural changes implemented since early 2023.
Reinsurers have benefitted from higher attachment points, stricter terms and conditions, and the repricing of property catastrophe risks. These adjustments have strengthened the foundation of the property/casualty (P/C) reinsurance market.
No. of Recommendations: 9
Hmmm.
At a nominal 10.3%/year for (just over) the next three years, BRK would reach $1MM/A share on Monday, Jan 31 2028.
Just in case anyone wants to mark their calendar
--sutton
(who is recalling that sometime in the late 1990s, I guesstimated that the $1MM/share BRK milestone would be reached right around the same date as my statistical obituary...so Jan 2028 is sounding a waaay too soon to me.)
(But I think I factored in perpetual ~2% inflation, whew)
No. of Recommendations: 2
At a nominal 10.3%/year for (just over) the next three years, BRK would reach $1MM/A share on Monday, Jan 31 2028.
This assumes that P/B in 2028 is the same as it is now; and as @mungofitch pointed out, that is not likely.
No. of Recommendations: 1
Will Buffett come out and say that he wouldn’t be buying at this price? Like in 1996?
No. of Recommendations: 1
Will Buffett come out and say that he wouldn’t be buying at this price? Like in 1996?
He said that because, at the time, Berkshire was offering class B shares for sale. Berkshire is not currently selling stock, so he has much less reason to say it now. But here's what Berkshire wrote in 1996:
Mr. Buffett and Mr. Munger believe that Berkshire’s Class A Common Stock is not undervalued at the market price stated above. Neither Mr. Buffett nor Mr. Munger would currently buy Berkshire shares at that price, nor would they recommend that their families or friends do so.
No. of Recommendations: 8
"It looks like the strong reinsurance results may continue through 2026.
https://www.insurancebusinessmag.com/ca/news/reins...
The global reinsurance sector is poised for strong earnings growth between 2024 and 2026, building on robust results in 2023, according to an analysis by S&P Global Ratings.
Key drivers include decade-high investment yields and consistent rate increases in property and property catastrophe lines, supported by structural changes implemented since early 2023."One of the nice things about owning a reinsurance company is that it is a lot less regulated than a frontline insurance company. Yes, there are still regulations, but no where near the same order of magnitude. This is especially true on rate increases. Most frontline insurers have to face state insurance boards to get major rate increases approved.
Companies that sell reinsurance generally do not have to do that. If the frontline insurers do not like the rates, they are free to go somewhere else, but in reinsurance, reputation often matters more than rates.
No. of Recommendations: 5
“Will Buffett come out and say that he wouldn’t be buying at this price? Like in 1996?”
He kinda is. Over $300b in cash and repurchased no shares.
No. of Recommendations: 20
wrote in 1996: Mr. Buffett and Mr. Munger believe that Berkshire’s Class A Common Stock is not undervalued at the market price stated above. Neither Mr. Buffett nor Mr. Munger would currently buy Berkshire shares at that price, nor would they recommend that their families or friends do so.
Imagine all the dumb people that threw away their money in 1996 by paying $32,000 a share.
No. of Recommendations: 6
"Imagine all the dumb people that threw away their money in 1996 by paying $32,000 a share."
Bravo. My thoughts exactly. Sometimes I think Value Investors are cursed by chasing the cheapest possible entry points.
No. of Recommendations: 18
Bravo. My thoughts exactly. Sometimes I think Value Investors are cursed by chasing the cheapest possible entry points.
I figure you sort of need one of two skills.
Either skill enough at valuation that you get a reasonable entry price.
Or sufficient skill at security selection to find something with such a long future of reliable value generation that you can hold so long that valuation at entry doesn't matter much to your annualized rate of return.
All entries long ago for Berkshire look pretty good now, in the same way that all of Berkshire's buybacks to date look good now. But never forget that that observation is hindsight...we were in something that had a long future. Not everything does.
One could make a case that valuation is easier than predicting a business out 10-20 years, so getting a half-way decent entry price is probably still a good thing to aim for--margin of safety and all that. Not everything has a glorious future, but almost everything has a price.
Jim
No. of Recommendations: 2
Imagine all the dumb people that threw away their money in 1996 by paying $32,000 a share.
After the B-share prospectus was published on May 8, 1996, when the A shares went for $33,400 apiece, the A shares have compounded at about 11.4% annually. Not bad.
