God, does that sound familiar. I certainly didn't do the depth of analysis you and Mungo did, but I sure as heck made similar mistakes, and have similar regrets. I convinced myself that 150K was about fair value --which was almost certainly a little optimistic-- and then compounded that mistake by declining to sell a single share even when we briefly hit that level in Dec. '07. I agonized about it for a couple of hours on that day, but allowed several weak-minded impulses to cloud my thinking, and interfere with my decision process. 1. I'd become a little infatuated with the idea that BRK's historical record made it highly likely that the long period of undervaluation would be followed by an overswing to the high side, and I'd have a chance to sell for at least 110% of IV. (Of course, I'd failed to recognize that current price at that moment was probably fairly close to that level already. A double-blunder.) 2. I'd convinced myself that a major market-crash was likely (obviously, I was right about that), and that BRK would be uniquely positioned to take advantage of it. (I still think that was quite reasonable, too --and I'm still a little disappointed that we didn't do a better job of capitalizing in '09.) 3. I stupidly allowed myself to think that lots of other folks would see it that way too, and that BRK would be seen as a uniquely safe haven in the storm. 4. I stupidly failed to properly assess the likely indirect impact of a major market crash on BRK valuation. (Huge drop in portfolio value, credit rating dropped, option-marks crushed. Failed also to recognize how badly the economy might be damaged by a major market-crash, and what that would do to BRK's op-earnings.) 5. I really didn't know what the hell I'd do with the money, after selling my BRK stake, which was the lion's share of my portfolio. I was afraid I'd be back to earning nothing in cash for an extended period. (I should've been channeling Munger, and been happy to sit in cash, and wait for another fat pitch.) 6. Didn't want to deal with a large cap-gains bite. (I should've accepted it gladly, as the cost of reaping a huge reward.) 7. It happened so fast (the huge BRK run-up in '07), that I really wasn't quite psychologically prepared. I'd been gradually building a big position, and still wished to build it a lot further, and suddenly saw the price climb to levels at which I needed to reverse course and start selling. I was still psychologically in buying mode, when I needed to snap out of it, and deal with the realities of the moment. If I'd addressed these factors with a clearer head, and done a better job of weighing them properly... if I'd sold even half my position on that day in Dec. '07 (which seems to me now like a clear no-brainer), I'd be a whole lot richer now. Like Ravi said, it's embarrassing to think back on the dumb things I did, but all we can do is learn, and adjust. I also agree, however, with Jim's implication (at least I think he may have implied it) that all of this anguished retrospection may tend to induce some unfortunate bias in the reverse direction in the next big upswing in BRK's price. Those of us who went through these experiences, and the subsequent agonized reflection, last time, may be all too quick to sell out at 1.3 or 1.4 BV this time... which could prove to be another big mistake.
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