Why do you keep saying BRK was a ‘loaded spring’ 20 years ago? Twenty years ago BRK had just finished almost doubling in less than 2 years, and had climbed 18% in 5 months. Seems the spring had already sprung a good bit prior to Dec. 2002.
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Not dishonest. Just ideologically wed to his position- which is not that costly to the extent that averaging into the indices will likely outperform expensive financial services over the long haul. I would have waited for the Fed and Twitter sideshows to play out before buying tsla, but…free will….
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Here is the data. Do you see doubling in less than 2 years ?
I understand people here are are angry with this data I am showing.
Do your own due diligence.
Dollar cost average in S&P. Get rich slowly. Sleep well. Enjoy life.
No anger, divi.
I was referring to the climb from $27/share BRK-B on 3/10/2000 to $47.84 12/24/2002.
Just a 77% climb during that time, maybe not ‘almost doubling’, but not a crazy generalization of that gain, I think.
Over that same time period, 3/10/2000 to 12/24/2002, the S&P 500 lost 36%!
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Oops Ben decided to help d20 out when I planned to make him do some homework. Brk has consistently held up better than the indices durin downturns and overall over the last 60 years. My money is on brk doing the same during the next recession while d20 recoups his losses on tsla. Free will.
BRKB was $52 on 03/12/1999.
The right way to say this is “BRK went down and then regained much of what it lost”.
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Your description is accurate. So is mine. Valuation on BRK got spicy in 1998-1999, climbing back up to those levels in 2002 meant it was hardly a ‘coiled spring’. You’ve still not explained why you keep using that terminology for BRK circa 20 years ago? Care to give it a try?
S&P500 from 3/12/1999 to 12/24/2002? -32% and on 12/24/2002 it was not far off its multi-year lows of that brutal 2.5 year bear market.
If one of these two were to be described as ‘a coiled spring’, don’t you think it’s more appropriate to apply that description to the one that’s near its bear market low, as opposed to the one that is 77% ABOVE its bear market low?
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Now I am just piling on but I added the S&P500 index values in the column next to the BRK prices that Divi posted because I thought it was odd that he didn’t do that since he is always comparing the two. I also added the current price.
At the end of 1999, BRK was a coiled spring after years of falling out of favor and having the multiple get compressed. Meanwhile, the S&P500 had hugely outperformed BRK but did it through by achieving historically unseen valuation multiples. Kind of analogous to where we were at the end of last year. Then the next few years saw that flip because BRK was a coiled spring in 1999 and S&P500 multiples became unsustainable. The next three years are shown using Divi’s table but with S&P500 added. By the end of 2002, BRK was at 133% of its start and S&P500 had fallen to 61% of its start. YIKES!
So 20 years ago, no one was saying BRK was a coiled spring and S&P500 was overvalued the way you could in 1999. So no, not the same story every year. The next 20 years saw BRK do fine over that stretch with 646% increase. S&P400 looks like 430% only but I am missing dividends reinvested and I think they have been similar total return over the period.
Today, I like BRK a bit better going forward. A bit less valuation froth and probably better earnings predictability for the next couple of years.
Anyways, I think the mantra of:
Dollar cost average into BRK. Get rich slowly. Sleep well. Enjoy life is a good one. That is me doing my own due diligence.
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The valuation argument is an attempt to justify one’s individual opinion of the outperformance. When you are comparing performance over 10 years any valuation difference is a wash. At that point the performance stands for itself.
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I disagree.
On Mar 20, 2020 BRKB was $170. Today it is $305. Is BRK today overvalued ?
This is just as arbitrary as the date of Mar 12 1999 you picked as a low point because it suited your argument.
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I guess we disagree. Makes a market.
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That disagreement could be turned into having some fun. Around 2 years ago I offered friend Divi a public bet on “www.longbets.org”. I offered him to bet on BRK doing better than S&P. Time: 5 years. He didn’t reply to my offer.
Up to now, 2 years later, my side of that bet he chose to ignore would have a huge advantage already, with BRK up around 30% since then and S&P around 0%. Pity he didn’t take it.
Anyway, I am generous. Dear Divi, I am offering you the same bet again. I bet that in 5 years from now BRK will have gained more in price than S&P.
According to the rules of longbets.org the minimum amount is $200. I leave it to you, will accept anything between say $500-$1000, up to your liking.
What do you say, Divi?
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Without more information you couldn’t say whether it’s overvalued or not, but you can be sure it’s a lot more richly valued than in March 2020, knowing that the company’s business hasn’t grown at that rate.
What did the S&P500 do from the bottom of the Covid bear to today? It’s also up strongly, not quite as much as Berk, 71% vs 88% but it’s not the same situation as 2002 where Berk had already rebounded 77% off its low, vs S&P had continued to decline and is near its bear market low.
We can see in retrospect, that if Berk was a coiled spring at some point after the 2000 bear, it was around its low of March 1999, not in late 2002. On the other hand, the S&P being much closer to its bear market low would be described more aptly as a coiled spring in late 2002.
Right now is not any great opportunity with Berk or the S&P, IMO. No coiled spring, but Berk is a better value, IMO, because the S&P got spectacularly overpriced recently while Berk didn’t.
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I’d like to see BRK at $260 again. I made a note that mungofitch said that would be a great entry point historically.
'38Packard
=> being patient!
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There should be more discussions about business performance, not about stock price.
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Disagree all you want… but state your case. How long is enough for valuation differences to be a wash? May be somethings are cheap for a reason??
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it is silly. So you cannot make a compelling argument and so you decided to pull your checkbook??? What if I countered you with a million dollar bet? Are you still game?
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No, as I want to make that bet with Divi.
Divi, your link leads to longbets, but there it says “File not found” and that “if looking for a bet it might not be publicly viewable at the moment”. Did you make a bet they might be currently reviewing?
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