Each person calculates IV for themselves based on their own assumptions. If you calculate IV and assume better than normal returns because of WEB, then you have a Buffett Premium. You should know what that is.As RW, notes, if you do not include a Buffett Premium, and you find that the Mr Market still offers you a price lower than IV, then either you have made an incorrect assumption elsewhere or the market is offering you an opportunity.wu,I don't dispute that there is a market opportunity, which is why 31% of my portfolio is in Berkshire. And we are probably not arguing about anything substantial. I am just saying that I think Buffett is valuable, RW thinks so too, and I suspect the general market feels the same way, so it seems silly to say that there is no Buffett premium in the current price. I think what RW means is that, even if we gave no value to Buffett's presence, the company would still be worth substantially more than it currently trades at, so that is an added margin of safety, and I agree with this. So I suppose in a sense you could say that, when you buy Berkshire, you are not paying for a Buffett premium, you get Buffett for free. But I think this is a sloppy way of speaking. You in fact likely are paying a premium for Buffett, you are just getting a very good deal on the rest, so the total overall transaction is still favourable.If and when Buffett leaves the scene, we will get some idea of what this premium is, but people buying today thinking there is no premium might be in for a nasty surprise when that day comes. They would be better served to expect a drop, as the Buffett premium disappears, but to know that even without Buffett, the company is already undervalued at present market prices, and any substantial drop might be a buying opportunity.Regards, DTM
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