Poll: What price for "all-in" ?

I imagine most people here already hold some Berkshire, perhaps nearly as much as you’re willing to hold in this one stock. Current price is ~ $268.

At what price do you think you will increase your holding to the max you are prepared to have in BRK? When are you gonna back up the truck?
.

  • 270+ What do you mean? I’m already at the max!
  • 260 Just waiting for a slightly better price
  • 250 Just waiting for a better price
  • 240 Can still go down quite a bit
  • 230- Bad times a-comin, keeping that spare ammo for a big drop!

0 voters

I ran a little model growing book value from 230 @ 9% over compounded over the next 20 years and a terminal value of 1.4 x book which gave 762 dollar a share. From the current share price that delivers a return of 11.6%pa.

At what price do you think you will increase your holding to the max you are prepared to have in BRK? When are you gonna back up the truck?

I am already way over the max: about 75% of my capital is in Berkshire-Hathaway. I am not going to back up the truck.

The trouble is that as Berkshire is going down, so are a lot of (most) other stocks. So, a decision has to be made where to best allocate finite investable dollars. I’ve got some cash that I could use to purchase more BRK, but probably won’t be backing the truck up, exactly.

*except, if we are successful in selling our house in the next couple of months, we’ll have a large pile of money that will need to be deployed. Maybe the timing corresponds to something near the low for Berkshire. Not enough to buy an A share, but many B shares.

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FWIW, the average one year return since 2008 for all starting days with a P/B in the range 1.127 to 1.189, as now, has been inflation + 27.7%.
Average two years forward has been inflation + 18.2%/year compounded.
I’d use more history, but it was basically never that cheap before the credit crunch.
I don’t expect those numbers this time, but I expect something considerably better than average.

And people are holding out for better because they have a gut feel they’ll get a lower entry price later on?
Not just in valuation level, but in absolute terms.

I understand the gut feel, but less so the holding out because of it.
Beethoven offers to write a concerto for you for free and you say, nah, I’d rather wait for Mozart to offer. I have a hunch he will soon.

If you think you might invest that money in something else, fair enough. There are always other opportunities.
But if it’s kind of earmarked for a Berkshire position, hey, it’s not so bad now.

Jim

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Allocating to Berkshire is not in vacuum. What is the upside for Berkshire vs some other stock that got beaten and down 90% and still growing 35%. Just asking. For ex: c3.ai, all time high is $180 (even though it is totally unsustainable price), now if you look at them, they are down 90%+ and still forecasting 35% growth. Of course they are not profitable and burning cash, but they also have $1 B in bank for $1.8 B market cap.

This is just an example, The point I was trying to make is there are dozens and dozens of SaaS/ or high growth companies with $1 B in their balance sheet, i.e., they have cash and they can survive today to have a future in tomorrow.

If your upside on Berkshire is inflation+6% vs companies that have a potential 50% or 100% gain in 2 to 3 year, one has to weigh the options.

Of course this Berkshire board, and the world here revolves around Berkshire, yet the answer has to be what if Berkshire goes to $250, but OKTA goes $20? For me, it is no brainer that OKTA at $20 it is.

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What’s the probability OKTA declares bankruptcy vs Berkshire? Do you factor that into your decision?

I’m not trying to be provocative, just wondering how to adjust for that possibility.

What’s the probability OKTA declares bankruptcy vs Berkshire?

Just about same. Let me rephrase the question. What you are looking for in Berkshire is not losing, and what I am looking for in OKTA is winning. Many folks are looking at Berkshire has solid, I cannot lose money, and I will make some decent return, which is all great, and if that’s where you are at life, your investing life, then Berky is a good fit.

On the other hand, you are looking at risk adjusted return and looking at where I can have an opportunity for outsized gains, something like OKTA has a place.

Buying Berkshire is going to involve such questions and answering them, and not just Berkshire price to value alone, is my point.

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Beethoven offers to write a concerto for you for free and you say, nah, I’d rather wait for Mozart to offer. I have a hunch he will soon.

LOL. The frugal Yankee in me understands the value of free. I would be fine with both writing a concerto for me.

If you think you might invest that money in something else, fair enough. There are always other opportunities.
But if it’s kind of earmarked for a Berkshire position, hey, it’s not so bad now.

To me that’s the emotional component to BRK that I find confusing. There ARE always other opportunities. There is a favorite rock star vibe for those running BRK that seems incomprehensible to me. Most of you seem to be wearing the proverbial T-shirt and have bumper stickers plastered all over your car, posters in your bedroom. It frankly makes me nervous about investing in BRK.

IP

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Speaking for myself, there is no “rock star” affect. There is probably a perception that could be wrong of some level of predictability in the gradual yet inexorable rise in value per share over time that draws me to hold 20% in BRK. Realizing those gains in a time to my liking is less sure.
A high level of certainty of long term gains of 10% per annum allows me to sleep well at night, and have a small percentage in riskier types of investments.

Jk

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What’s the probability OKTA declares bankruptcy vs Berkshire?

Just about same.

Really? OKTA has about the same possibility as Berkshire of going out of business? Hmmmmm.

What you are looking for in Berkshire is not losing, and what I am looking for in OKTA is winning. Many folks are looking at Berkshire has solid, I cannot lose money, and I will make some decent return, which is all great, and if that’s where you are at life, your investing life, then Berky is a good fit.

Yes, this is the stage I’m in now. I am retired, with no pension or SS benefits yet, so more interested in capital preservation than outsized returns.

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“To me that’s the emotional component to BRK that I find confusing. There ARE always other opportunities. There is a favorite rock star vibe for those running BRK that seems incomprehensible to me. Most of you seem to be wearing the proverbial T-shirt and have bumper stickers plastered all over your car, posters in your bedroom. It frankly makes me nervous about investing in BRK.”

Understandable. You are coming late to the party. People are in different decades than you and have more experience with Berkshire. What others do, though should not make you more or less nervous if you understand the company and its financials, do your own work. Don’t make decisions based on what others telling you without at least triangulating them. Then your decisions will based on your own data. Same with everyone else here.

I can’t speak for others, but I post about what I do or think. The fact that Warren and Charlie have beaten the S&P for as many years as they have kind of entitles them to a little rock star status, don’t you think?

It’s all in fun. Serious fun.
Mohnish Pabrai says he’s a game player. Trying to be good at a game, like chess. Thats what I’m doing and maybe others, too, though they may not think of it that way. At some point, it’s fun. Challenging.

You are proud of your accomplishments. Same here. We simply like the guys that do this way of investing best. There are others besides Warren and Charlie. Warren’s the only one that charges the company $100,000 a year to do this for us, and never raises that. Pretty good deal. I’ll take it and give him the respect and kudos he deserves. Nobody’s twisting your arm! Do your homework – don’t listen to us!

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“A high level of certainty of long term gains of 10% per annum allows me to sleep well at night, and have a small percentage in riskier types of investments.”

Agree wholeheartedly jk. BRK is 65% of our investable assets and will be large part of our ultimate “annuitization” plan with intermittent sells based on its valuation every so often as described by Jim. Not for everyone but it makes a lot of sense to me.

Warren and Charlie are rock stars imo, but it’s the predictability of future earnings, controlled risk, thoughtful structure and culture that give me the most peace of mind. Lots of ways to get from A to Z however!

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Yes, this is the stage I’m in now. I am retired, with no pension or SS benefits yet, so more interested in capital preservation than outsized returns.

Capablanca, a chess player, world champion, extraordinary end-game player, often finds a draw in impossible situations. He says I play for win and settle for “draw”. You might have heard about playing offense as the best defense, etc.

SO if capital preservation is your prime concern, you could just invest in US treasuries. You are looking to make money, risk adjusted positive returns.

I have made most of my “options” money in more volatile names than low-beta’s. Because you are not getting compensated sufficiently for the risk and risk materializes neverthless.

JimKredux has said it all, all that was Said so often here (So this post of mine is superfluous). It should not be “confusing” as it’s actually very simple. Berkshire is all about market beating returns with the most possible predictability and with (at least perceived by us) maximum safety, without the additional risk that normally comes with such.

The ones in Berkshire since many decades used it to become rich, and now to stay rich.

The ones in it not that long are fully aware that the +30%/year times are gone and they won’t become rich with it — but that there is virtually no other stock where one has such a high probability of longterm(!) beating the S&P by a *few % without additional risk (Or a bit more, if using opportunities when Berkshire is for sale).

Regarding “always other opportunities”: Sure, but Rock star Warren is sooo much better than me in finding and properly assessing them (I try too, but only with a little “casino money” = entertainment).

If the thought of investing in Berkshire makes you nervous, the consequence should be clear.

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BRK isn’t a stock that gets you rich. It is stock that keeps you rich. Or as Jim put it:

We were tempted in the door by rumours of a wild party, got inside to find nothing but bowling going on. We were definitely deceived.
But then we found out we really liked bowling.

https://discussion.fool.com/in-this-respect-kelbon-is-right-ther…

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Don’t make decisions based on what others telling you without at least triangulating them.

Absolutely. That’s a guiding rule in life for me. Any position I take or do not take will be due to my choice. What I hear here is only a starting point for investigation.

The fact that Warren and Charlie have beaten the S&P for as many years as they have kind of entitles them to a little rock star status, don’t you think?

I confess, I didn’t understand fawning over rock stars as a teen, either. We all have strengths that are worthy of admiration. Enjoy your excitement. There can often be too little of it in this world.

Mohnish Pabrai says he’s a game player. Trying to be good at a game, like chess. Thats what I’m doing and maybe others, too, though they may not think of it that way. At some point, it’s fun. Challenging.

Which is how I approach just about any purchase, be it stock, real estate, or cars. Car salesmen hate to deal with me. I rather enjoy it. Now that’s strange, I know.

I am glad that you all are enjoying yourselves. I am just not that used to investing being that emotional, and it’s a definite change from what I see from some of you on other boards. Yes, confusing. Thankfully it’s done amidst some awesome data.

IP,
noting this was an observation of a perception rather than a criticism

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BRK isn’t a stock that gets you rich. It is stock that keeps you rich. Or as Jim put it:

We were tempted in the door by rumours of a wild party, got inside to find nothing but bowling going on. We were definitely deceived.
But then we found out we really liked bowling.
https://discussion.fool.com/in-this-respect-kelbon-is-right-ther…

Thanks for bringing that up—I’m inordinately proud of that bit of writing : )

Tucked away in that post is the prediction that:
Offhand, one might reasonably expect owning one share of Berkshire to get you at least around $2k/month of price gains in the next three years.
(assumes typical/conservative trend of value growth, and selling at a typical/conservative multiple of value)
Multiply your number of shares times that number and see if it’s enough.

The prediction was wrong. By March 2021 the return was only about $1400/month.
It was a pinch cheapish on the third anniversary. Something about a pandemic, IIRC.
But by two months later (38 months) the return from the post date was around $2500/month, and has remained over $2300/month until the current (June 2022) price dip.

Jim

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Bottom line thinking: if all stocks drop 50% from current level, and the economy goes into great recession, most businesses either lose money or face financial difficulties, which stocks would you rather have in your portfolio?

There is a favorite rock star vibe for those running BRK that seems incomprehensible to me. Most of you seem to be wearing the proverbial T-shirt and have bumper stickers plastered all over your car, posters in your bedroom.

I like this simile, maybe because I understand it. I’m not sure it’s accurate, because the “body of work” speaks for itself: a symphony of profit making companies assembled over multiple decades with (what appears to me) a long and profitable future ahead, even if it stopped being written tomorrow.

On the other side are a cluster of not-profitable corporations, many of which go to zero, a few of which race up the chart and become big hits for a time, and most of which muddle in the middle until they are put out of their misery by time or circumstance.

It frankly makes me nervous about investing in BRK.

You don’t have to know the composer, you have to like the composition. I do. I also happen to like the composer, but that’s not required if the music is appealing.

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