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Over the past week, how much of the growth in Berkshire's share price was a result of the upgrade from Paine Webber? Well, no one can say for sure. But, it sure seems that Alice Schroeder's Paine Webber report must have contained a secret which made Mr. Market believe that Berkshire was much more valuable than he had previously believed it to be.

So, with that in mind, let's take a look at what Alice had to say (in a nutshell): 1. GEICO & Executive Jet are still growing. Their growth in value will result in lower short term operating earnings. 2. General Re is currently struggling, but the future still looks bright. 3. Warren's still good at allocating capital. 4. KO & G share price have performed badly. 5. In order to comply with SEC laws, a repurchase of shares would have to be announced . 6. All things being equal, instead of repurchasing shares, it would make more sense to allocate capital in a way that would generate future cash flows. 7. Inability to find a new home for the ~$30 Billion of investable funds is frustrating Mr. Market. 8. Recent (false) rumors have hurt BRK share price. 9. Currently, Mr. Market hates value names. 10. Current (conservative) IV estimate is ~$75,000. 11. P/BV is the lowest it has been since 1983. 12. Currently trading ~50% below IV. 13. Today's share price provides a significant margin of safety. 14. Upgrade from attractive to buy based on valuation.

So, how much did you learn from Alice's report? What did Alice tell you that you didn't already know at this point last week? Based on nothing more than what you learned from Alice's report, would you say that Berkshire is worth more today than it was at this point last week? The only thing I found in this report that had not already been discussed on this board was the fact that the P/BV is currently the lowest it has been since 1983. And, does that really matter? Did you need to know that tidbit in order to determine that Berkshire was currently undervalued?

I should pause and say that I have nothing but the utmost respect for Alice Schroeder, and I certainly do appreciate her knowledge of the inner workings of Berkshire Hathaway. She understands Berkshire far better than I could ever hope to.

Remember, Alice said: "Our rating and valuation method is not a substitute for investors thinking for themselves. Nevertheless, we hope to give some insight into our own thinking that may be helpful."

So, the point of my post is this. I would imagine that, when it comes right down to it, many Berkshire shareholders learned more about themselves this past week than they did about Berkshire . If the Paine Webber report did not include a single item of information that had not previously been discussed here on our TMF Berkshire board, then I think we need to recognize two things:

1. Seeking confirmation. For those who are buying or holding Berkshire shares, the Paine Webber report serves as a source of confirmation that you're doing the right thing. You may not have even realized that you needed that reassurance, but, you feel better now that Alice said that you have been right all along. You don't have to be particularly perceptive to notice the change in atmosphere on this board since Alice's report came out. There's absolutely nothing wrong with that. But, I think there is something to be learned from it. This feeling of confirmation should serve as a reminder to have the courage of your convictions when you're certain that you understand the underlying value of your company, even when Mr. Market is telling you that you're wrong.

2. Knowledge. I think it's worth our time to stop and recognize what an incredible wealth of talent we have here on our Motley Fool Berkshire board. Don't hurt your arm by trying to pat yourself on the back, but just think about it. Haven't we already discussed, in great detail, every point that was featured in the Paine Webber report? Didn't we come to the same conclusions that Alice did? Didn't most of us already upgrade the stock to a "buy" based on valuation? Did we really learn anything from this report that would necessitate the need for our board members to look at Berkshire any differently than we have in the past?

In conclusion, I would like to say 1. Have the courage of your convictions when you're certain that you understand the value of your company better than Mr. Market does. Those are the moments in time that will determine your level of success as an investor. 2. I would like to offer a BIG "thank you" to the people on this board who are contributing to my Berkshire Hathaway education. We certainly have accumulated a tremendous pool of resources in our little community.

Good Luck,
Sandman

"Go ask Alice, I think she'll know" (taken from a Jefferson Airplane song, "White Rabbit").


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