Post #15522 by mungofitch on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤

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Does anyone remember that "5 year rule" that was in the owners manual? And once the criteria was clearly not met the goalposts were moved. Perhaps it's time to update the manual.....

I think it's fair to allow that no rule of thumb is going to be ideal forever.

The biggest flaw of the new touchstone isn't that it's new, it's that it's still using the S&P's market value progress as a bogey, rather than some metric of its value. It is now clear that the S&P can get wildly more expensive for a very very long time. We continue to await the singing of the proverbial fat lady.

These graphs are a bit old, but they illustrate the idea that Berkshire has been doing pretty well on a relative basis
http://stonewellfunds.com/BerkshireAndSpyValueGrow...
http://stonewellfunds.com/BerkshireAndSpyRealReven...

If one were to look at a decent metric of value rather than price, it seems that Berkshire has still been passing that "five year rule" pretty nicely.

Jim

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