No. of Recommendations: 16
Interestingly, the five year chart doesn't look like the current price is extended all that much...
Hmmm.
I find charts showing valuation tend to be rather more useful than charts merely showing a price.
Here's a different look at the last five years.
www.stonewellfunds.com/BerkshireValuationFiveYears.png
That's the inflation adjusted price history overlaid with some valuation-based landmarks, such as 1.5 times last known book per share, over the last five-and-a-bit years.
Of course, we know that known book per share is about to jump upwards a bit as soon as the new year end statements are released.
But that's usually the case, so comparing the current situation to slightly out of date "known book per share" in the past isn't in any way unfair.
But, for your viewing enjoyment, here's a rough guess at what it might look like after the year end statements come out, assuming a flat stock price in the next few days for clarity:
www.stonewellfunds.com/BerkshireValuationFiveYears_forecast.png
I really should add another line for "inflation adjusted highest known buyback price to date". At least as long as Mr B stays in charge, it's hard to come to the conclusion that the stock is worth less than that number.
Anyway, I do agree that the stock is not hugely overvalued in any absolute sense, and the current rally might continue a while yet.
But it is certainly more richly valued than usual in the last 5-10-15 years, and at a level that usually leads to relatively dull returns for a while if held for 6-12-18 months.
Jim
