Hey, rational--Remember that long flat spot Q4 2006 through Q2 2007 that Berkshire traded at almost exactly $110000?What would (did) you peg fair value at at say end Q2 2007?I'm just realizing how much my views appear to have changed. Dumb anchoring, or newfound wisdom?I was convinced the the $110k was getting more and more preposterous, loadingup like an overwound spring, based on the idea that firm was worth maybe $135k+ back then, the range in which I started lightening up later in the year.But that figure represents 1.9 times the end-Q2 2007 book.In December I noted that the "expected" price based on long run historic averageprice to IV ratio would suggest one should expect to see a market price (not IV) of $131500.http://boards.fool.com/the-price-26153807.aspxThat's 1.70 times the then latest reported Q3 book.Needless to say, figures like 1.7x and 1.9x are a lot higher than the 1.5x we now holde as a distant "some day" stretch goal!Of course price/book is a pretty crude value metric, not really good enough.I'm happy discussing it these days because the choice of valuation methodology doesn't change the conclusion at times of serious undervaluation.When we get closer to IV we can be a bit more discerning about valuation models!Jim
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