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Berkshire has more than 100 subsidaries and a massive stock portfolio. I understand it fairly well, and it doesn't have any significant risks, other than Buffet
by valuearb 9y ago
Berkshire has more than 100 subsidaries and a massive stock portfolio. I understand it fairly well, and it doesn't have any significant risks, other than Buffett dying. And if the price tanks when he dies, I'll use that as an opportunity to buy more.
Because I have a good grasp of what it's actual intrinsic value is, I can wait to buy more until it's cheap which increases my long term returns. That's much harder to do with an index fund, indexes don't get as cheap as BRK gets, and tend to remain overpriced. For example, 15 PE used to be considered a fairly priced stock market, but for the last 20 years or so the market has mostly been much higher than that.
- berberous 9y ago>> " it doesn't have any significant risks, other than Buffett dying." That's somewhat comical given that he's 87 years old. Life expectancy tables show an expectancy of 5 years. Probably should cut that back a fair bit given his taste for Coca Cola, See's Candies, and burgers.... All that said, given the nature of his business and the strength of those in succession behind him, hopefully Berkshire continues to do well.
- valuearb 9y agoTo put my point more clearly, when Warren passes away Berkshire's value isn't going to change. It's probably not going to add value at the same pace as it would with him leading it, but it's value is still likely to continue to compound significantly faster than the market. What Warren has built is embedded deep in the core of how the entire company operates. So that's not much of a risk at all.
- gbacon 9y agoThe question is to what degree fickle investors will return without the perceived Buffett magic.
- valuearb 9y agoBerkshire has never been highly valued. It's never gotten a premium because of the "Buffett magic". If investors want to spurn it and let it trade close to book value, I'll happily buy even more.