Post New

I’m getting ready to unload a significant chunk of my total BRK position, the portion which remains within my 401k, which will not trigger any immediate taxable event. I am currently about 82% all-in with BRK, and 18% in cash. If I reduce my exposure to BRK with this dump, I’ll be about 65% BRK in my taxable account, which I will never sell, and the rest in cash. If I also consider the cash position within BRK, then I guesstimate that I’ll be about 45% or so exposed to the equity markets.

What would many of you do as to timing this sell in leading up to the annual meeting? Or might it be better to wait until Monday for the market to digest any surprising news? BRK may indeed sell off on the news, whether the quarterly results are promising or not, whether WEB steps down or not. I’m inclined to watch it carefully this week, and maybe unload it all before then, so as to capture the usual momentum and excitement leading into the weekend. What say you?

Might as well sell it now.

What would many of you do as to timing this sell in leading up to the annual meeting?

Statistically there is usually a bit of a rally up to the Friday before the meeting, and on average a bit of strength a couple of days after. I wouldn't take that too seriously, but I did actually do the analysis once.

With absolutely no justification whatsoever, my hunch is that you could sell almost any global equity right now and buy it back (or something else) a lot cheaper some times in the next year or two. For the broad US market, I think that would even work after paying tax. As mentioned, no justification at all. Just some guy on the internet rambling. But, as the saying goes, when Mr Market is offering you a preposterous price for something you own, you should at least think about it before turning him down.

Jim

WEB always strives for an upbeat meeting, without surprises. I believe the stock usually goes up afterwards. If he is to step down, I would expect it to be in the form of an announcement that he is starting a transition process, which would phase in over the next year or two. Seeing that the life expectancy of a 94 year old male is 2.8 years, an announcement of that type would not be jolting news, but rather assurance that an orderly transition is planned and in the works.

The price is pretty good right now though.....

"Statistically there is usually a bit of a rally up to the Friday before the meeting, and on average a bit of strength a couple of days after. I wouldn't take that too seriously, but I did actually do the analysis once."

There is usually a rally around 1-2 weeks before and after Berkshire Hathaway earnings. I did an analysis, too.

Reinsurance results will probably very good with potentially tax decreases coming.
Munich Re, Hannover Re etc. are firing on all cylinders.
I´m fully invested and it could be a mistake to sell Berkshire Hathaway shares.

"Don´t sell the damn stock." ;-)

Munich Re chart:

https://finance.yahoo.com/chart/MUV2.DE#eyJsYXlvdX...

What would many of you do as to timing this sell in leading up to the annual meeting? Or might it be better to wait until Monday ... What say you?

Why not sell covered call(s) to unload your shares? Go a month or two out, strike a little OTM.

BRK-B currently at 528, the Jun 530 will get you 18.00

Seeing that the life expectancy of a 94 year old male is 2.8 years, …


This is true, but not relevant to Buffett. The way that survival number is calculated is by taking the number of deaths of men 94 years old and dividing it by the total population of men 94 years old, to get a rate, and doing the same thing for all higher ages, and applying those rates (in what is called a life table) to get the average survival for a 94 year old man.

Those population rates include everyone, including people who already have a known serious illness; even, in extreme cases, in terminal stage of such an illness. And such people represent a high percentage of 94 year-olds. In the subset of 94 year-olds without a known serious illness, expected survival would be much longer.

We don’t have such statistics, but I would guess that Buffett probably still has 5-10 years of expected life. He may very well stop going to the office in the next couple of years, but probably not because he’s dead.

DTB

My Mom is 102.7 years old and recently scored 15 out 16 correct questions on memory and brain processes tests. She continues to read two newspapers, magazines, and do difficult crossword puzzles daily. Until recently she was walking the halls at her assisted living place until a fall occurred. Just saying Warren may be on the job for possibly another five years.

Uwharrie

that is amazing. Happy for her

My friend's Dad is now 92. He has declined significantly since his 90th birthday party.

Some of us remember watching Wall Street Week on PBS where Philip Carret, a fund manager in his late 90s, would visit and opine on his investing moves. I loved Carret’s outlook and wisdom.

He lived a full life as described in the link below:

https://en.m.wikipedia.org/wiki/Philip_L._Carret

Uwharrie

Very impressive accomplishment! Congrats to your mother!

For those interested in the history of Berkshire Hathaway buying businesses managed by the "aged" and then adopting the management (allong with a wide variety of other valuable/entrtaining nuggets), download "Poor Charlie’s Almanack The Essential Wit and Wisdom of Charles T. Munger (I copied each chapter and pasted them into a single Word document for easier reading):

https://www.stripe.press/poor-charlies-almanack

BTW, my answer to the subject of this thread was to sell my B shares and retain the A shares (bucks-wise a 50/50 split, but the B shares had less overall embedded capital gain as well as being less strressful to sell)

I also shed a number of other US-based company shares.

Jeff
(Fence-sitter)

Apologies are in order:

Despite "Poor Charlie's Almanack" being an excellent and worthwhile read, it was not where I read the description of Berkshire's buying of companies with elderly, but extremely competent, management. Simultaneous with my reading the book, I had downloaded every annual report letter that WB had written and then read them serially (also an interesting, if a bit redundant, read). That's where the stories came from, not from the book.

Jeff

This is true, but not relevant to Buffett. The way that survival number is calculated is by taking the number of deaths of men 94 years old and dividing it by the total population of men 94 years old, to get a rate, and doing the same thing for all higher ages, and applying those rates (in what is called a life table) to get the average survival for a 94 year old man.

Those population rates include everyone, including people who already have a known serious illness; even, in extreme cases, in terminal stage of such an illness. And such people represent a high percentage of 94 year-olds. In the subset of 94 year-olds without a known serious illness, expected survival would be much longer.

Thanks! You just explained something that has been bothering me for years, but I didn't understand. But it makes sense, someone who is pretty healthy and active at an age will statistically live longer than someone the same age who had serious health problems. So average life expectancies that don't take into account the actual health state of an individual could be really off.

My recollection from recent years is a dip post meeting.

Just sold some B shares for 538....

Just sold some B shares for 538....

Selling at the 52-week (and all-time) high isn't such a terrible thing....

Mr. Market grinning like a Cheshire cat holding all the shares purchased from board experts since BRK.B was supposedly overvalued at $430.....

Just sold some B shares for 538....
Selling at the 52-week (and all-time) high isn't such a terrible thing....

Valuation is still pretty exuberant compared to the last 10-20 years, so it seems like a better-than-random moment to lighten up if you had a reason to do that. We'll know a fresh book value tomorrow, typical growth would suggest maybe $309ish, so the current price of $538 is 1.74 times that.

Berkshire's stock price has obviously continued to rise in the last while. But it's interesting to note that it has actually been underperforming the average S&P 500 firm for the last ~3 weeks. It is not the #1 choice when the market is in a "risk on" mood.

Jim

I also sold some B's at $538.39 - still my largest position (outside of SPY)

tecmo
...

Mr. Market grinning like a Cheshire cat holding all the shares purchased from board experts since BRK.B was supposedly overvalued at $430.....

That may be true. But you know what they say - "There are MANY reasons to sell a stock, but only ONE reason to buy it".

I’m out — my entire 401k position in BRK was filled @540.15, “a tidy profit,” as Jim likes to say. I was just staring at the 31 lots I acquired on the many dips along the way, beginning in June 2009 all the way to June 2020, and I was amazed at the overall return. This was mainly an asset allocation decision and not anything more than that. At age 70, I feel like I’ve won the game to some extent, but I’m still playing. I took my overall BRK position at 82% down to about 65%. The remaining 65% is in my taxable brokerage account acquired mostly since 2008 so this allocation makes me sleep just a lil’better in these exuberant times, and my 401k is all in cash at the moment which gives me lots of optionality.

I will never sell the remaining 65% (fingers crossed) as it is earmarked for a handful of charities which are important to me. And if Congress wants to close that loophole in allowing the passing of my Berkshire shares with the stepped up basis for philanthropy purposes, and without incurring an estate tax, then they are going to have an awful lot of pissed off charities out there with such legislation.

But it makes sense, someone who is pretty healthy and active at an age will statistically live longer than someone the same age who had serious health problems. So average life expectancies that don't take into account the actual health state of an individual could be really off.


Exactly.

Northwest Mutual actually has a lifespan calculator that looks at risk factors like family history, smoking, exercise, recreational drugs, use of seatbelts, medical checkups, etc., and they give Buffett an expected age of death of 103, towards the top of my 5-10 year guesstimate. https://media.nmfn.com/tnetwork/lifespan/index.htm...

However, they don't don't explain how they do the calculation,, and most importantly, they don't ask what appears to me to be the most important question: what current medical conditions do you have, such as cancer, heart failure, Alzheimer's/Parkinson/ALS, etc. A fairly high percentage of people at 94 have known health conditions that mean they will die within the next year or two. For instance, if you take ten 94 year-olds, with 3 of them like Buffett (no known medical conditions), but 2 with Alzheimer's, 2 with metastatic cancer, 2 with severe COPD and another with congestive heart failure, you might have the first 3 with 10 year life expectancy, and the other 7 with 2 year life expectancy, and if that is typical for 94 year-old males, then your population mortality rates and life table will tell you that the average life expectancy is (3*10+7*2)/10 = 4.4 years. The key point is that the average includes people that are much sicker than Buffett is today.

dtb

Correction: Taxable brokerage account shares acquired since 1998…big difference.

I admit upon seeing BRKB break past 540, I unloaded nearly my entire tax-deferred shares. For some illogical reason, I'm still holding onto one last tranche in case things blow sky-high post-meeting.

I will continue to hold the shares in my taxable accounts, since I already sold off this year's allotment and see no need to tangle with the taxman any further.

My amateur theory is that from this point, I don't see a great upside. If and when the share price falls back with the rest of the market, I will again build back my position.

Foolish? perhaps. But I know I've done this before when the price got ahead of itself and I bought back in and bought more shares than I'd originally sold, so that was good!

Since I post as little as possible, I will take this time to thank Tex and bbmd and weaselboy and others for the walk down the Yellow Brick BRKers. I met Gartmann at a talk given by Roger Loewenstein, where I also met Josh and Jill Silverberg - I hope they are doing well wherever they may now be. I was a youngin' at the time -- under 30! -- and when John mentioned he'd paid under $10 for his yellow jacket, I told him how I paid $5 for my winter coat at a thriftshop in NYC. He laughed and told those within earshot -- he's one of us. Check what he paid...and that is how I felt about everyone I met in the BRK world. The money was for peace of mind, not for gaudy showcases. I emailed with Lyle and Charlie Page. Charlie would visit the art gallery in Carmel where my wife had her paintings and kept an eye on them for us. A sweet soul.

Would weaselboy -- or anyone -- know the whereabouts of JBenvent? He was another helpful contact when I was in the early stages of learning the BRK culture.

Seriously, everyone I met or simply read on the old AOL board helped educate me and become comfortably with being the first person in my immediate family to invest in the stock market. My parents lived through the Great Depression (yes, I was the outcome of their 25th Wedding Anniversary celebration!) and were permanently fearful of anything that wasn't flat out guaranteed. It cost them millions, by my count. Which didn't matter to them. They kept busy until they couldn't.

Hope all going to Omaha have a great time and take good notes! As always, I'll be with you in spirit.

SD

"The money was for peace of mind, not for gaudy showcases.”

I love that line. Thanks for sharing.
Second the best wishes for the Omaha travellers.

I admit upon seeing BRKB break past 540, I unloaded nearly my entire tax-deferred shares. ...
I will continue to hold the shares in my taxable accounts, since I already sold off this year's allotment and see no need to tangle with the taxman any further.

I sold all but a token amount in my tax-deferred accounts a while ago.

Now I've got a June 540 covered call against a long-held holding in a taxable account with a rather large unrealized gain, that I really don't want to get assigned and the gain realized.

If BRK-B is still above 540 might need to buy shares the day before expiration (on margin) so those new shares will be the delivered lot. Will that work?

Now I've got a June 540 covered call against a long-held holding in a taxable account with a rather large unrealized gain, that I really don't want to get assigned and the gain realized.

I've been mightily tempted to sell calls the last few days. But I haven't for just this reason. I don't want long term gains in 2025 because I want to balance some long-term losses against short-term gains.

If BRK-B is still above 540 might need to buy shares the day before expiration (on margin) so those new shares will be the delivered lot. Will that work?

It works. I've done it a few times.

Note, logically it has to "work" because people who sell naked call options ALWAYS have to buy the shares to deliver when they are assigned.

Now I've got a June 540 covered call against a long-held holding in a taxable account with a rather large unrealized gain, that I really don't want to get assigned and the gain realized.

If BRK-B is still above 540 might need to buy shares the day before expiration (on margin) so those new shares will be the delivered lot. Will that work?

What I would do is allow the market to pay me more money to wait for the weighing machine. Buy back the June 540 and sell September 540 (or Jan 550 or whatever). The premium and breakeven (net exit price) will be higher, so you keep that extra money, and the odds of exercise drop back near zero.

You can do this pretty much forever. Sooner or later there will be some price weakness and you pocket the entire price of the last contract.

It's true that the most likely price rises over time, but not that much that soon.

Jim

Jim, do you like the "wheel" system of regularly selling calls and puts around a core holding of BRkB?

i was debating all week and yesterday whether to do the same.!! I had lightened up a bit into treasuries in non-tax acountdue to uncetainty on tariffs and trade, but... I didnt pull the trigger yesterday.... so we shall see...
my other account is destined , I hope, for my neices and nephews eventually who all despite great quals, and hard work, are still not having it as easy as we did back in the day....its tough to fund a family these days

Jim, do you like the "wheel" system of regularly selling calls and puts around a core holding of BRkB?

I looked it up.
I'm not a fan of "systems", as a rule.

For Berkshire, it would entail having a pile of cash most of the time, which means you're not really invested in Berkshire that fully, you're mainly going for option premiums, which much of the time would be a lower return.

I guess the biggest problem is knowledge. If you know how to value one or several firms well enough to know what would constitute a good entry price, then there are other better ways to make a buck. Compounding that is that writing a put at a price that would get you a good entry point is going to produce a very low rate of return, potentially for a very long time.

I did run a related "system" of my own for a long time. (and restarted recently, at a smaller scale). Cash-backed put writing, with modest leverage. Since vanishingly few positions are ever assigned if you're keeping an eye on the positions to make sure they all have passable prospective rates of return, you don't really need $1m in cash to back up $1m in nominal value short puts. Even a small amount of leverage turns a ho-hum return into quite a nice one. I did it only with firms for which I had a reasonably informed opinion of value. It's a good match for "deep value" investing, as when a position takes a long time to turn up in price (or is a permanent value trap) it's actually good for you. I found the return from the portfolio to be roughly half way between [what the underlying stocks were returning] and [10%/year]. The two problems are (a) it's a whole lot of work, and (b) there are times when prices are too high and/or option premiums too low that it just isn't worth while trying. You know this in advance since you can see the prices before you enter positions, but it does mean you have to have something else to do that year.

Jim

What I would do is allow the market to pay me more money to wait for the weighing machine. Buy back the June 540 and sell September 540 (or Jan 550 or whatever). The premium and breakeven (net exit price) will be higher, so you keep that extra money, and the odds of exercise drop back near zero.

You can do this pretty much forever. Sooner or later there will be some price weakness and you pocket the entire price of the last contract.

Thanks.

BRK is a bit scary now. It has been overvalued according to P/B for over a year now, since Jan 2024. BRK-B was 385 then and is pushing 540 now. That's like a 40% gain. How long can the price stay irrational or get even more so?

It looks like rolling to the Sept 540 would net about $1300 per call.

Decisions, decisions.

The way things are shaping up, there is a good chance that the bull market will be picking up. Could BRK participate, even as "overvalued" as it is?

How long can the price stay irrational or get even more so?

There was a lot of discussion of valuation when I bought in (around 2009-10?) and my takeaway back then was that about 1.75x was fair value and that multiple would probably rise over time. As it's turned out there's perhaps no reason for a higher value now, but I would still see 1.5-2.0x as the fair value area. That leaves under 1.5x as cheap and above 2.0x as expensive. Just my 2p, obv.

SA

. As it's turned out there's perhaps no reason for a higher value now, but I would still see 1.5-2.0x as the fair value area. That leaves under 1.5x as cheap and above 2.0x as expensive. Just my 2p, obv.


I think assuming that true fair value is over 1.5 times book seems plausible. I just always like to make the clear distinction between fair value and what the stock is most likely to trade at, which seems to be considerably below 1.5 times book on average. Lacking any better information, my guess is that that will remain true.

In that one sense, Berkshire is a lot like a closed end fund that is always trading at a discount...as mentioned in another thread this week, getting it at a discount to fair value doesn't actually benefit you at all if the discount remains. It's only the rate of change of value that matters to your return.

Jim

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.