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Discussion Starter #1
Anyone buying Berkshire Hathaway? Stock appears more affordable for now and has seen steady gains since the 50:1 split.

Curious to know if there is anyone jumping in.
 

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I bought some in my virtual portfolio the day before the split and it's up 13% already.

I would have loved to buy some in real life too but it was too many $$

There is some grousing about adding Berkshire Hathaway to the S&P in which case the ETF's and money managers will buy some too

My prediction is that we will see it hit 100$ before the summer.
 

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Berkshire is nowhere near the Graham criteria for defensive investors, so it isn't anywhere close to being on my radar.

Some of the valuation metrics are shockingly high:

Price/Sales (ttm):26.79
Price/Book (mrq):22.71
Trailing P/E (ttm, intraday):34.73



K.
 

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Discussion Starter #6
So that means you should NOT buy right? ;)
the article says there is a potential upside of 30%-40%. Not saying I'm going to buy however there has never been a opportunity to buy into Buffet before now - and as we all know Buffet rarely misses.
 

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Berkshire is nowhere near the Graham criteria for defensive investors, so it isn't anywhere close to being on my radar.

Some of the valuation metrics are shockingly high:

Price/Sales (ttm):26.79
Price/Book (mrq):22.71
Trailing P/E (ttm, intraday):34.73


What determines the price of a stock though is not the valuation but rather how many people want it and the price they will pay.

If there is one person out there that people recognize as being a GOD of investing it's Buffet. So everybody with a trading account will want at little piece plus the money managers will have to buy in too.

It's supply and demand folks and Buffet is the guy selling tarps at a hurricane party.
 

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What determines the price of a stock though is not the valuation but rather how many people want it and the price they will pay.
No disagreement here -- stocks, and for that matter, anything on Earth, are valued largely by what people are willing to pay. And during times of craziness, people are often willing to pay too little or too much, the latter of which is what I think is happening here. The best we can do is come up with approaches that attempt to set a fair price for a stock (or an item), and one such strategy is Graham's Criteria for the Defensive Investor.

(The other thing to keep in mind is that Berkshire doesn't pay a dividend, so you're really banking on capital appreciation and your assessment of the "fair value" of the stock in this case. If a stock did pay a really nice dividend, you may be able to relax these constraints somewhat. )

If there is one person out there that people recognize as being a GOD of investing it's Buffet [sic].
Well, therein lies the reason for why I think the stock is overvalued. There are plenty of well-run companies that don't command such stratospherically expensive valuations. You can think of the difference between this stock's current price and it's "fair value price" (however you measure that -- maybe using a DCF model or some other approach) as being "buffeted" by Warren himself. And looking at its price, I (personally) wouldn't ascribe anywhere near that much value to the company based on one man.

It's somewhat akin to me saying: I have a pair of brand new running shoes, and Usain Bolt wore the same brand when he set his world records, so I'll sell you this pair for $2200. An observer may look at me funny, and say, "Yeah, but the fact that he set some records is in no way indicative of the fact that he'll continue winning records, and gosh, that's about 22 times the value of these perfectly nice, $100 running shoes that I see." And I'd agree with them.

K.
 

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What determines the price of a stock though is not the valuation but rather how many people want it and the price they will pay.
But there is a metric for people's willingness to pay for earnings, the P/E. Look at many former growth stocks in the tech industry, Cisco, MSFT, RIMM, companies people used to pay 50-100X earnings for, now people won't pay more than 15X earnings.

So just because people pay 33X earnings now for BRK, if the coming slowdown of organic growth occurs, I'm guessing people will realize even Buffet cannot continue growing his profits the way he used to.

My only gripe with the OP's post is that just because the $ figure of the stock has been reduced through a stock split, doesn't make the stock any 'cheaper'. If anything, the recent run-up in price suggests that BRK.B was cheaper when it was trading at $3000 than what its at now.
 

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Discussion Starter #10
My only gripe with the OP's post is that just because the $ figure of the stock has been reduced through a stock split, doesn't make the stock any 'cheaper'. If anything, the recent run-up in price suggests that BRK.B was cheaper when it was trading at $3000 than what its at now.
I don't think I said it was "cheaper" rather more affordable in relative dollar terms ($3k v $74).
 

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What determines the price of a stock though is not the valuation but rather how many people want it and the price they will pay. .


That is true in the short term, (2 years or less) not in the long term. The valuation of a company will eventually reflect the earnings or value of the business.
I have to compare the ROI on brk to other investments. At this point of time there are better deals out there.
 

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brk.b is expensive right now. everyone is flocking to it b/c of a lower individual unit price. at the first drop in stock price they will head for the exits for the same reason, lowering the price to a point that will be attractive. then, my friends, you should beg, borrow, and steal money to get in.

same applies for real estate. it has been a long wait, but get your cash ready...
 

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brk.b is expensive right now. everyone is flocking to it b/c of a lower individual unit price. at the first drop in stock price they will head for the exits for the same reason, lowering the price to a point that will be attractive. then, my friends, you should beg, borrow, and steal money to get in.

same applies for real estate. it has been a long wait, but get your cash ready...

expensive in terms of what measure? what is your intrinsic value based on your sound calculation of the company?
 

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We have owned BRK.B for years. Now that the stock has split it is affordable to more shareholders than ever and this new demand is contributing to the rapid price increase. Once the hysteria calms down, the price will correct.

The price pulled back yesterday when S&P stripped Berkshire of their AAA rating.
 

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Discussion Starter #17
too funny, it was worth $50 less than 6 months ago. I can see the frenzy driving it up to $90-100. get out at $85-89 if you can...
I really have no idea what it was worth a month ago. Why is it almost every review I read says this stock is undervalued? Can you share with us why you feel this stock is overvalued?
 

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enuf about the buff.

potash.
cameco.
cisco.
crescent point.

which one is not from sask. So what if sask'll never get a winter olympics.

chambers is canadian, though.
 

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Berkshire is nowhere near the Graham criteria for defensive investors, so it isn't anywhere close to being on my radar.

Some of the valuation metrics are shockingly high:

Price/Sales (ttm):26.79
Price/Book (mrq):22.71
Trailing P/E (ttm, intraday):34.73


What determines the price of a stock though is not the valuation but rather how many people want it and the price they will pay.

If there is one person out there that people recognize as being a GOD of investing it's Buffet. So everybody with a trading account will want at little piece plus the money managers will have to buy in too.

It's supply and demand folks and Buffet is the guy selling tarps at a hurricane party.
I dont think buffet is much of an idol....rememeber that he's a shark and relied alot on luck. I look at companies like ameritrade who perfected the idea of hording small investors and giving them satisfactory returns or even monthlyreturns who is i admit not as fruitful as ameritrade but has cemented the basic concept of giving the client what they want. Long term returns that are reliable. But there's one thing i dont understand...Why do bonds seem to be running out of fuel in this market?
If I could get an answer I would be glad.
 

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for over 5 decades, Buffet has relied on luck? and you don't know why bonds are running out of steam?

try search to find investment books to read. start with a guy named Graham. he wrote a book that is one of the best ones out there today. oh, and don't be shocked when you see that he wrote it many, many decades ago...
 
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