"In other words, you think Berkshire will be worth around a minimum of $1.4T in 20 years.

Bet you didn't do the math on that one before you said it."

I think at 10% per year, BRK will be worth $1.2T in 20 years (currently $180B), not $1.4T. Yes, I think this is feasible. None of their large investees are going anywhere in the next 20 years (think Burlington Northern, Coca-Cola, GenRe, GEICO, etc.).

Obviously, the caveat to this prediction is whether they begin paying a dividend after Buffett is gone. If they paid out 50% of earnings as a div, then obviously the market cap would only go up by 1/2 as much.

"i could listen to him talk all day long"

Ditto - all the guy does is make sense - I can't think of a single thing he's ever said where my reaction was "WTF is talking about?" - can't say that about many people.

Explain?

This is very possible. Pimco currently manages over 1T. 1T is not as outlandish as you think. Berkshire can easily be worth over 1T in 20 year's time. Inflation alone would almost double Berkshire's value over 20 years. After that, we also have 20 years to earn money and then compound the earnings.

Did you buy? Nice short term coop if you did.

Opps just noticed this was posted a while back when the share price is still high.

Interesting way to look at it. I can't imagine BRK going on forever the way it currently is. At some point there has to be some divestitures, dividends, spin-offs, etc.

Although, AAPL is currently at what 600b? The size of BRK is my biggest worry, not what happens when WB leaves/dies.

I am not so sure that the majority of their value is insurance anymore. The op cos just did 9b in earnings and will most likely hit 10b this year. Maybe 50-50ish?

Also, my understanding of BRK is that something like AIG cannot happen to them. AIG was writing insurance on mortgages and writing CDS for RMBS. The type of risk control at BRK is much better than it was during that time at AIG. Also, BRK has about 60-70b in insurance liabilities and 30-40b in cash. Then you can look at its 100b in investments and 10b a year in op co earnings. It seems to be in fine shape and a chance of significant value destruction/death spiral is negligible and a 0 near impossible (if not entirely impossible). You're probably more knowledgeable than me though, so I would love to hear any more thoughts.

So Morningstar says the growth of $10k of VTSMX from 5/20/11 is about 9.49% and Berkshire Class B is about 11.49% -- so far its been a better investment.

VFINX (S&P 500) is at 11.15%

So far so good vs the Total Market index, so far vs the S&P its basically only slightly better and is a more appropriate benchmark anyway.

Berkshire won't likely decrease heavily in value unless there is a massive catastrophy that causes its ReInsurance business to need to recall cash big time.

I think its entering is Index Phase honestly. Hope I'm wrong though!

Bump up thread again

So far I've been very happy with my performance

I honestly believe I have one of the best risk-adjusted portfolios in this entire forum.


All I had to do is hold one stock.

http://www.econ.yale.edu/~af227/pdf/...20Pedersen.pdf

Really good paper with empirical analysis on Berkshire Hathaways performance.
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In a nut shell

Employ 1.6 to 1 leverage(in case of berkshire, the interest rates are effectively negative)

Invest in very low volatile stocks/companies.

LOL, no. You've performed statistically in line with the market while taking on a large amount of risk from such a concentrated position in a single US company. Go look at BRK from 2008. It lost half its value in a bit over a year and took five years to recover. And that's while everything went well at the company headed by a man in his 80s.

You know how Buffett made his 2013 profits? Selling huge amounts of puts on the indexes. You were heavily risk exposed to the broader market, and heavily exposed to adverse events, more than in an index fund or another diversified basket. All for rather average returns (we are in the biggest bull market in modern history).

You're crowing about pure luck - a gambling win with the puts he sold.
This suggests Berkshire is not the company it once was, if it is taking dangerous derivatives gambles to keep its profit up. What do you think would have happened if there was another tsunami in Japan? An earthquake? Asian flu? Too much inflation from their printing? Larger currency moves? Berkshire would have lost an absolute fortune, and the stock would have tanked and taken a long time to recover, given that it's trading so far above book value. You've taken on huge risk buying these contracts through BRK, and got lucky. And that's not the only risk you're taking:
This is more unusual risk. These contracts are what sent companies worth tens of billions broke. But never mind his derivatives gambling...how are his core businesses doing? Pretty poorly:
You got lucky. Enjoy the money, but know that you underperformed most people in risk adjusted returns.

I really don't think your gauging the risk in berkshire correctly.

Just my personal opinion.


And his core business are doing poorly??? Are we talking about the same company???
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They have plenty of cash on hand and regular cash flow from their stocks/business to support the +EV bets Buffett took. Yea sure, rare natural disasters can occur, and there is some risk in that, what's your point??

I am being too results oriented because a four-sigma event didn't happen in Japan??? The company has been holding $40B cash on hand.

How is he being very risky???

[x] buffet edge lost
[x] "in line with the market"

beta brk.a = .59

what risk metrics are you using besides "zomg derivative bets"?

better yet, what do you do for a living? you seem to think your the authority on everything finance but i would bet highly on you living in mom's basement

Looks like it tracked the SP500 but had one good trade during 2007. So over the past 10 years, it doesn't look like you were really compensated for the risk of owning a single company.

we both know its not one company

you posted a graph of 5 years then made a statement about 10 years. do you see whats wrong with this?

Dude you posted the 10 year chart. I'm just showing that ignoring that one run in 2007, he's merely tracking the SP. Buffet is not crushing it, or at least not over the past 10 years. Plus he's gonna die soon, not like that will keep BRK from slight over/underperforming. Much better off owning the SP.

Yes, [x]Buffet edge lost. Observe (from his own numbers at a fan site):

http://www.thebuffett.com/performance.html

You tell me that 1999-2012 is anything like 1965-1999, and I'm going to call you delusional. His loss of edge is in fact statistically proven by that period. Seriously, look at the numbers for yourself.

Yes. Your lord himself agrees, as he provided the data for the table linked above and reports it as such in his annuals. BRK performance is indeed in line with the market, even including risky derivative bets. I quote the master:

Note: six of those nine times are in the last 15 years. Again, highly statistically significant. How much evidence do you need that his edge is gone?

I have a couple of businesses and trade options (retail).

Oh no, I upset a Buffet fanboy. I offer opinions like everyone else here, the motives or beliefs you impute are your own. Some people find them valuable, just as I find your post valuable (it shows me the mindset of a Buffet fan).
Nice catch, but everyone goes through rough patches in their life. Don't be judgmental. I'm trying to save so I can move out. I used to be a high flier but I got cleaned out by shorting BRK when he got lucky with derivatives and the fanboys piled in:



Your day will come, man.

There are over 10,000 public US companies that you can trade.

You really thought your best bet was to short that the one company run by someone who is widely regarded as the best long-term capital allocator ever and while it's trading at a very reasonable book value as well???

You couldn't come up with another bet that granted you a better risk/reward???

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He has not widely outperformed the S&P, but even if he's able to outperform it by 2-4% avg. over a 10-15 year period, this will amount to a significant financial gain.

Or you could just invest in a total market index fund which will likely outperform the S&P 500 by 2-4% over 10-15 years.

You can tell by his posts that the dude clearly has an emotional dislike of Buffett.

Our old friend emotion, which clouds far more minds daily than drugs and alcohol combined.

That has to be a joke.

Truthsayers idiocy has stopped astounding me. I could understand his arguments against BRK (even if they were mostly blah) but a short case? You can't be serious. It might be the worst short in equities.

It wasn't that. It was getting wiped out on one short play that makes me think it was a joke. It is hard to have that much disregard for risk mitigation.

BTM,
Didn't Toofsayer attempt to ad hominem you to death in that "advice to your 25 year old self" thread and one of the points he tarded on was that you had some financial difficulties a decade ago? He has to be joking in this thread, no way anyone can lack that much self awareness.

If he's not joking, one of the more hilarious things I've seen.