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. Gosh, I don't even have to say this stuff any more!That's pretty much what I was thinking.Plus the notion that maybe we were right last time and 1.5x is cheap and 1.7x is fair.I will tell a worse mistake: BRK gets to 1.4x book, or $150-160k, and you tell yourself that selling will be a big mistake, so you hold on. Then, a few months later the stock market begins a new bear market...Tell me how you would feel then about your decision to not sell at 1.4 x book? I'd be clearheaded and happy.It's not sensible to sell something at a price demonstrably below what it's worth if you don't have a pressing need for the money.Plus, if you are in a situation that you might have a pressingneed for the money you shouldn't have it in this or any other stock.One's entire equity portfolio should be sized based on the assumptionthat the market might drop 90% and stay there for 5 years.A couple of statistical quirks that might be worth keeping in mind as people are reading this great thread.Warning to pure value investors: price effects ahead.- Though it may have no predictive power whatsoever, historicallywhen Berkshire gets into a rally it keeps going pretty steadily then stops abruptly.Historically it has not paid to sell during such a rally, but ratherto wait for a pullback of at least 3% as a sign that the rally is over.This is a particularly interesting notion if there is a rally into overvalued territory.- If there are are people out there who are tired of waiting and start selling too early at 1.3x or 1.4x, due to an interesting thing called the "disposition effect" this will actually increase the momentum of the rally.Though perhaps somewhat jagged and unpredictable, the momentum of the rise in a stock will tend to be longer and stronger.This isn't just mystical chartism, it falls out of the math when you look at people who are anchoring on their entry prices and sell too rapidly when they move from a loss into a profit position.The strength of this effect can be estimated using something called the Capital Gains Overhead Regressor (CGOR), which basically is an estimate of the weighted average entry price of the people likely to be trading the stock this year. In short, the stock price is repelled by this price level, and it will be fairly low for Berkshire for a long time.You can set up a 100% simulated universe of traders and stocks and prices,some modest fraction of whom will tend to sell promptly soon after they move into a profit position,and this is sufficient to create momentum very similar to what is observed.Jim
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