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Many months ago in September I did a post talking about the predictive value of Berkshire stock Book/Share on the near-ish term (a few months to two years) price appreciation of BRK stock.

Sometime after that, someone posted a log-log plot of BRK.A stock price vs book/share from like 1965 through to 2022 or something like that. I spent some time (a lot) looking at that and basically recreating that analysis and going further.

My results are shown here:

https://kazart.blogspot.com/2026/04/berkshire-stoc...

The lesson I draw from all of this is that the main story is:
1) BRK made you 25% a year from 1965 to about 1998
2) The purchase of Gen Re in 1998 marks a change so that since then, BRK has re3turned about 10% a year, and seems to still be doing that
3) The ratio of Price/Book of a share can serve as something of a guide to whether BRK is likely to go sideways for a while (when Price/Book > 1.5, say), or whether you are not likely to be able to buy it at its current low price in the future, if Price/Book is lower.

Anyway, it is mostly just a pretty picture with niced trend lines, not necessarily directly teaching you how to get rich quick.

Enjoy,
R:)

PS if someone could put a link to the original log-log plot post on Shrewdm a few months ago, I have spent hours looking for it and haven't found it ...

Not at all what you asked for, and out of date, but at least it's a pretty picture to look at.
http://www.stonewellfunds.com/SmoothedRealValue.pn...

It kind of shows book and price, both inflation adjusted.

It's an "adjusted" real book value per share based on the notion that any drop in book per share more than 3% is just a transient market dip hitting the equity portfolio, value probably didn't really drop much.
And the price figures are just the average real price in each calendar quarter, the idea being to eliminate meaningless short term noise.

The smooth line is just a 16-quarter WMA of the adjusted real book figures. Since that line is so smooth and isn't a bad proxy for value, the ratio of current price to the current point on that line is, unsurprisingly, quite predictive of forward returns.
http://www.stonewellfunds.com/PriceToTrendAndForwa...

Jim

Nice charts, Thanks. Well I’d take Inflation + ~7% & a consistent good night’s sleep until the cows come home at this stage!

"PS if someone could put a link to the original log-log plot post on Shrewdm a few months ago, I have spent hours looking for it and haven't found it"

Thanks for sharing, Ralph. Here's the graph you asked for, updated to Dec 2025.

https://docs.google.com/document/d/1zl_L--clGQlFSj...

May I make just a couple of points about your graph?

1. The GenRe purchase in mid 1998 wasn't the only event that could have caused the change in the rate of growth. The S&P 500 also changed its rate of growth, although beginning in early 2000. Here's some data:

period, Growth of Berk's BV, Growth of S&P 500 index

Oct '64 - Dec '80, 18.6%/yr, 1.4%/yr
Dec '80 - Dec '99, 28.8%, 10.2%
Dec '99 - Dec '20, 10.2%, 5.3%

My guess is that the cause of the S&P's change in growth rate was that the S&P's P/E had reached a high point in early 2000. Similarly, Berkshire's P/B reached a high point in mid 1998. Just another possible cause for the change in growth rate.

2. 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.

I would be interested in other conclusions that you can make from comparing historical Price and Book Value. The most general conclusion that I would draw is that price tracks BV, and that that relationship is causal, not coincidence. As to the future, my guess is that the S&P can return to long term, nominal 10% growth (in the last five years it's been over 14%/yr), but that Berkshire cannot return to 19% growth. Berkshire is just too big to do so, especially if it restricts itself sure things, like BNSF, and eschews unsure things, like NVDIA.

Correction. The S&P 500 index grew 13.0%/yr between Dec '80 and Dec '99, not 10.2%.

"Since that line is so smooth and isn't a bad proxy for value, the ratio of current price to the current point on that line is, unsurprisingly, quite predictive of forward returns."

Nice chart. What is the chart saying about the four-year return starting today?

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:)

rrr:
Nice chart. What is the chart saying about the four-year return starting today?

Nice. Don't be shy ask for what you really want to know. The worst that can happen is you won't learn anything, but maybe there will be a helpful answer! I learned this in querying Chat. Ask for what you really want.

The chart published in my blog post goes up to EOY 2025 and shows:
1) Stock price above the trend line
2) Book above its trend line, but not quite as much as Stock Price is
3) A current P/B of about 1.5 which, at least in nominal terms, seems to be predictive of flat to normal growth, is NOT predictive of stock price actually going down (in my semi-quantitative semi-intuitive estimation anyway).

I would also say I don't think there is any evidence that we predict anything about 4 years in the future with this stuff. I think the trend line is the best prediction of 4 years out, and what the bumps and wiggles tell you about, if anything, is the next 1 to 2 years.

Myself, I added a bit to BRK in the last month which is in my "not-AI" pile which is smaller than my AI pile these days. My only other "not-AI" pile is MRFOX for what its worth. I still think AI has a factor of a few to grow, but am definitely aware that current pricing of those stocks assumes a bunch of trillions of returns before too long and there could be a lot of reasons that doesn't happen soon enough to justify current prices. But NVidia still has quite a backlog and a chip that everybody compares themselves to, so what the heck, I'm still in.

Cheers,
R:)

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