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rrr12345:
Just a nit-picky point. If the exponent in your exponential fit is 0.0931, then the growth rate is e^0.0931, or 9.76%/yr, not 9.31/yr%. I's sure that you know that.
Actually that had escaped me. So I think of a result like 0.0931 as "9.31%/yr Compounded Continuously" but you are correct, 9.31%/yr compounded continuously is 9.76%/yr. So BRK's actually done a bit better than I thought: 29.5%/yr before up through 1998, 9.8%/yr since 1998.
I added some CPI to my own calculations, and can summarize this:
1) From 1965-1998, BRK.A value after inflation doubled every 3 years or so (2.9 years)
2) From 1998-2025, BRK.A value after inflation doubled every 11 years or so (10.6 years)
Also, without showing the numbers in detail, I looked at the annual price history of BRK.A and asked the question: If you wanted to take a real dollar value out of your BRK holdings every year "forever" who much could you take? If I start with one A share worth in 2025 $ 100,882 at end of 1997, and I take $6,000 per year, I still have $105,422 worth of real A shares at the end of 2025. At its lowest, my holdings of A shares dipped in value to $61,224 in 2011 and then came back up so by 2025 I had more than I started with. So something like 6% per year shoulda woulda coulda been sustainable and would be in the future if BRKA continued appreciating in the future the way it has in the past 55 years.
As to predicting: A price/book of ~1.5, where we are right now, seems to be associated with 0% to 45% one year growth in price in the last 15 years. I think more times than not when the stock has been at 1.5, you did fine over the next year. The thing to realize in trying to time an entry into BRK is that if it is rising at its mean right for a few years while you wait for a low price/book, you LOSE THE GROWTH it had during that time by being out and keeping your power dry. Another way of looking at it is if you can get in at $500,000 at 1.5 ratio, but two years later you can get in at $600,000 at a 1.35 ratio, you would have been better off buying at the 1.5 multiple and catching that 20% growth. For me, I'm a normal holder right now at 1.5 ratio bolstered both by these numbers and the fact that people who know more than me (the management of Berkshire) are doing buybacks. When Berkshire is a buyer, I am a buyer. ( I tried doing this with Mungofitch, but he doesn't have CNN and Yahoo announcing when he is purchasing so he is a little harder to follow).
I think my next step is to start looking for companies/stocks that have had good growth with price that is within spitting distance of their book value, and see how their price and book look on log charts. It doesn't seem to me anywhere near impossible that you could find something that will almost certainly do 1/2 as well as BRK did from 1965-1998, and 1/2 as good as BRK during that period is a lot better than BRK does now.
Thanks for checking out my stuff!
R:)
