Back up the truck moment?
Is that your call?
Just be careful with what we wish for…
Too afraid now!
Little fear is good.
You really think one or two days more or less do matter that much?
Maybe you are willing to tell us more about your thinking?
No deep reasoning.
Looked really good today, wanted to buy, couldn’t. Grrr. About the same reasoning a dog might manage.
Maybe today is the best day to buy, probably it isn’t.
It seems likely to me that there won’t be many better opportunities.
As for the tea leaves reading for the broad market:
It would take two or three more days about this bad to trigger my “bottom detector”.
Jim
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Too afraid to buy now.
System acts like it is broken. Financial and monetary system.
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What percentage of your holdings is in BRK?
Over half the portfolio.
Presently my two largest holdings are BRK & GOOG.
Me too, though it’s close to a tie for #2.
Depending on prices, GOOGL might be my #3 at the moment.
Jim
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mmm…my last long buys of BRK were about two years ago…biggest chunks were just under $170 per share. I remember the fear then…I just swallowed hard, and then opened a bottle after I hit submit. At that time, I was also thinking that this thing had much further to fall.
Like Jim, and Phoolish Phil, this feels a bit different this time, and may go down a lot more before this is all over. Nibbled for the first time today, since early 2020, and filled at $269. Wow! That was a fast execution. Keeping a lot of dry powder for now. I’ve waited awhile for these opportunities, so here’s my chance. What happens between now and next year falls squarely within the realm of behavioral finance. Cajones — Carpe Diem!
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This is no longer about valuation. This is systemic liquidation
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As for the tea leaves reading for the broad market:
It would take two or three more days about this bad to trigger my “bottom detector”.
We’re not too far away from Jeremy’s 2500 on the broad market. That broken clock may be right this time!
Anyone knowing when BRK Jun/Jul or whatever later than Jan 2024 options will be available?
(Before someone recommends “Just Google a little instead of bothering us here”: Yes, I tried and read somewhere about how the system works - but didn’t understand it, so I still have no clue when those options will appear.)
What percentage of your holdings is in BRK?
BRK : 25%
GOOG: 5%
Note: for the first time ever, I now have more BRK than US Index funds (SPY, RSP, QQQE combined). Note: Cash is now under 5% - also the first time in a while.
tecmo
…
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Too afraid to buy now.
Funny. -Buy when you’re fearful.
Price here is pretty good, but can always go lower in the short term. -Maybe hang some limit orders out there and hope they are executed. If this becomes systemic and there’s a lot of forced selling the price will also go much lower for a time.
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For what it’s worth, I too added a little bit around $269 per B. The odds seem pretty good that results on a 12-24 month view should be pretty satisfactory.
Despite the gut wrenching feel to the market action yesterday, it is worth bearing in mind that Berkshire is only down about 10.7% YTD ( vs down around 23% for the S&P total return). In my case measured in GBP the strengthening USD has meant that Berkshire is essentially flat for the year even including the recent fall.
Like some others I have also been steadily adding to Alphabet in the last few weeks.
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Thanks, ppant, for sharing. Aren’t you normally always fully invested? Did you sell something else to buy BRK and alphabet?
Thanks, ppant, for sharing. Aren’t you normally always fully invested? Did you sell something else to buy BRK and alphabet?
Yes that’s right. I moved from capital from Unilever and Diageo to Berkshire and Alphabet. I do always carry a bit of cash but right now it is at a slightly lower than usual level at just over a year’s expenses worth.
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Purchased a bit more this morning at $270.80
I’m in for some more at $267.70. I guess that’s 1.162 times book.
It might trade lower for a bit, but bad outcomes after a year or two seem unlikely.
Jim
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THANK YOU. CAN U PLEASE GIVE US MORE, HISTORICAL, CONTEXT OF WHAT THAT VALUATION MEANS GOING FORWARD? MOREOVER, WHAT % OF TIME THIS CHEAP?
TRYING TO GET A FIRMER GRASP AS TO HOW EXTREME THIS VALUATION IS.
THANK YOU. CAN U PLEASE GIVE US MORE, HISTORICAL, CONTEXT OF WHAT THAT VALUATION MEANS GOING FORWARD? MOREOVER, WHAT % OF TIME THIS CHEAP?
TRYING TO GET A FIRMER GRASP AS TO HOW EXTREME THIS VALUATION IS.
A reasonable question.
but no need for caps : )
I use the average of two valuation methodologies.
A multiple of peak-to-date book, and a valuation method using a multiple of earnings for the operating subs.
Using that “consensus” value as a yardstick:
It has been this cheap only 9.8% of the time since 2008, around the time that valuation multiples took a big one-time step downward.
Those days fall into three clusters:
A bit in the credit crunch (not as many days as you might guess),
off and on mid 2011 through end 2012 just before the original P/B buyback threshold was announced;
and then a while during the Covid bear.
So, based on this very limited history, you could think of it as the kind of opportunity that comes up about once every four years.
In the same time range since '08, the average forward return from a valuation comparable to this has been around inflation + 24.5% in the subsequent year.
Inflation + 17.3%/year looking out two years.
(I take observations of average forward returns by decile, then run a curve through that, and report the current point on the curve)
Obviously the future will not be just like the past, and it would be prudent to temper expectations a lot compared to those numbers.
But forward 1-2 year returns could be quite a bit lower than that and still be very attractive.
If you consider the average valuation level since a date longer ago, the expected returns are
proportionally higher since it implicitly assumes a higher average multiple.
That’s the only reason I limit it to the 14.5 year history: conservatism.
Jim
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great thank u
Tell me about it.
I’m a little frustrated because most of my “ready to deploy” cash is at a bank that has already gone home for the day. Silly Europeans.
LOL, you surprise me, Jim. That’s what a line of credit is for, so you can go online and transfer from your credit line into checking at the speed of light, to buy more BRK any time you want. Heck, your credit’s good with me, I’ll spot you for the weekend. I’m not worried a bit. How much do you want?
Hmm … $258/B …
Oops, never mind. I’m using my cash and credit line to buy more BRK for myself. Sorry 'bout that.
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LOL, you surprise me, Jim. That’s what a line of credit is for, so you can go online and transfer
from your credit line into checking at the speed of light, to buy more BRK any time you want.
Heck, your credit’s good with me, I’ll spot you for the weekend. I’m not worried a bit. How much do you want?
Kind offer!
But as always, I’d want to make sure the loan was uncallable : )
Clearly you changed your mind pretty quickly, by the end of the post. Smart fella.
I simply took that annoyance as a lesson, move that particular block of US cash out of that silly European bank on Friday.
As a small bonus, Interactive Brokers is once again paying actual interest. 1.08% for balances above $10k, presumably rising again soon.
Not meaningful especially after inflation, but better than a negative rate.
Jim
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Detroit, with all cap posts it is yourself to get control of. Read some history, things can go nuts…and do go nuts. Prices vary greatly.
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