Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (36) | Ignore Thread Prev | Next
Author: commoncents33 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 211790  
Subject: Re: How I've done investing in Berkshire Date: 11/6/2012 5:56 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I have read a couple of your posts on Berkshire's valuation over the years, and I can't recall you ever putting a value on the "Buffet premium".
Obviously, Berkshire with Buffet is worth more than Berkshire without Buffet.
Since Buffet has a finite lifespan, he needs to be depreciated over time.
Does the multiple compression between 2001 and 2012 perhaps simply represent a the slow depreciation of the Buffet premium?



It seems like you may be mixing two separate and unrelated concepts here.

You are correct in saying that the odds are overwhelming that Berkshire without Buffett is somewhat less valuable than Berkshire with him (the amount could be argued forever).

And you are correct in saying that since he has a finite span at Berkshire, some "slow depreciation" makes sense. Absolutely, although figuring the pace of depreciation is quite tricky...even more so when you don't know the starting value.

Where this seems to go off the track is the implied assumption that there was any "premium" on the valuation of Berkshire in 2001...that is, that in 2001 Berkshire sold at a valuation higher than the mere sum of its businesses warranted.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (36) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement