Hi Jim.
Do you know you per chance how much company book value declined for Berkshire is the great financial crisis from top to bottom?
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Jim,
I think I recall you saying that you prefer using price to peak book value per share as a valuation metric. Are you using the reported ~$230 per B for peak book/share? That would put the ratio at about 1.16x, correct?
Rob
“Do you know you per chance how much company book value declined for Berkshire is the great financial crisis from top to bottom?”
…
This post from Jim updated thru Q2 provides a great historical overview of Berkshire performance relative to several valuation factors. The performance thru the 2008/9 financial & more recent COVID crisis relative to these valuation measures is especially interesting considering our current “inflation-control” attempt and market reaction. Thanks Jim!
http://www.stonewellfunds.com/BuybackChart2022.png
https://discussion.fool.com/i-do-not-have-a-link-to-the-chart-at…
ciao
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So looking at the chart even after the stock price had dropped 50% it was still trading at 1.2 x peak book? Or was that a written down 1.2x most recent book?
Has your major bottom detector fired yet?
Nope.
Not particularly close to triggering
Jim
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Do we think multiples could expand because of all that cash on the balance sheet with rates headed higher?
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Thank you! Hopefully, first major bottom indicator, already triggered, intact and BRKB a no brainer from this valuation?
I think Berkshire’s valuation will head lower if it turns out they still have $100bn in cash.
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BRKB looking $260 pre market
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Yeah, but remember in the end those in power won and he lost everything.
Don’t fight the Fed…?
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“Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”—Sir John Templeton
Wow, so much pessimism out there but so hard to be a contrarian here. Already added a good bit of BRK this summer, but leaning towards sitting on the sideline until Q1 2023 when maybe a Powell pause will lift all boats and spirits. Really hope we will see a lot of Q3 BRK (and AAPL) buybacks next month.
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Don’t fight the Fed is right. And they are projecting multiple increases soon. One perhaps .75% in November. I’m remaining very cash heavy for this reason.
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Mr Market off his meds today
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It’s likely the unknowns that are the issue, no? Will it be worse than the projected multiple increases? Can we expect more negative surprises like today’s? Even a positive surprise along the lines of “it’s still bad, just not as bad as we thought” could cause the market to rise.
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I’m going on a bit of a gut feeling that the Fed’s tightening is still mis-understood by the markets and there’s still a lot more pain to be felt.
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FWIW - Totally agree and I ain’t putting my money on the BUY button yet.
'38Packard
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How true. One stock that I own, ASML, opened down 8.4% from yesterday’s close, and then it rose 13% from the morning low to the afternoon high. The invisible hand is spastic.
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Here’s the main reason that Mr. Market was off his meds. Mostly technical.
We’ll see what today looks like.
'38Packard
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Rallies are nearly always explained. Then again, so are mysterious lights in the sky, crop circles, and other phenomena which are often unexplainable.
My theory for such rallies is: lots of algorithmic trading following a sudden burst elsewhere, followed by lots of FOMO by human traders, all for little to no reason.
It’s like when there’s a line of solders standing ready to fire, and the Sargeant says “Hold your fire” and then one guy doesn’t, and suddenly there’s a huge volley from the entire line because one guy pulled the trigger early. The madness of crowds, sort of.
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