The Motley Fool Discussion Boards
Stocks B / Berkshire Hathaway
|Subject: Re: 40% Overvalued||Date: 10/8/2012 8:23 AM|
|Author: Technodweeb||Number: 194726 of 228095|
You may want to look up the Q ratio, or CAPE, or Shiller PE, or debt to GDP. Whatever you want to look up to make the market look expensive, remember two things:
1. In the year 2000 all these ratios were at all time highs. Major highs!
2. In the year year 2000, Berkshire was:
A) Not as cheap as today (1.4-1.5 times book vs 1.24 currently or
less depending on next the next quarterly report.)
B) Wound up more than doubling in price in less than 10 years.
Berkshire to me is a rock solid investment, despite the market being overvalued. At least I think so.
My IV estimate is in the 180K range based on history. Many here do not even want to think about anything over 160K because they use an 8x or 10x multiple on operating earnings on top of BV. Some people use Float and BV together. There is another metric called SALT.
Not that there is anything wrong with conservatism (it can save you a lot of pain sometimes), but I believe that Berkshire's IV deserves the 12x multiple. Conservatism is what Graham would call "margin of safety". Most of those on this board are humble and generous with information, without wanting to over promise anyone anything, and I can't blame them for that. It is better to under promise and over deliver than to have a lot of disappointment. However, I still believe in my heart and mind this company belongs in the 180K range RIGHT NOW based on the prospects in the future, 10-20 years down the road.
The multiple being assigned to the subs right now is stupid silly. I do not believe that it will last much longer, and Berkshire will revalue itself to the upside.
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