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It is impossible to make any estimate of the value the market is placing on Warren Buffett's presence. Is it $10 billion, $20 billion, $50 billion? Pick a number out of a hat ... there is no objective way to make this estimate.

I disagree. Investing is about picking a number that is reasonable, and it is also about assessing how precise that number is. For instance, the number may not be $100 billion, but I think it is highly unlikely that it is zero. My guess would be $20-40 billion. But that is for intrinsic value. It is harder to say how much of a premium the market is assigning for this feature of Berkshire. If you choose not to play this game, fine, but if you say it is impossible to make "any estimate" then it is wrong for you to say that the market is putting it at exactly $0:

I do not believe that the market is attaching any premium to his presence.

And then you say something different: that it is actually negative:

More likely, the market is discounting Berkshire because of the "uncertainty" associated with succession. The market could be placing a much LOWER value of Berkshire's long term prospects because market participants overestimate the degree to which Buffett is needed for the ongoing value of Berkshire's businesses to persist.

I believe a stock market reaction similar to what took place with Apple after Jobs died is more likely than a persistent drop in Berkshire's quote when Buffett is no longer there. Also, the degree of a drop will depend on how much of a surprise it is and there is no way to know how that plays out.

This is getting confusing. In one post, you have said that the market premium is unknowable, that it is negative (a Buffett discount), and that it is positive but transitory. I only agree with the latter. I think if Buffett disappears, the market will express very clearly that that premium was positive, with a sharp drop in market prices. If they drop more than about 10%, I will probably buy more shares; in the longer term, prices are likely to rebound nicely as the market realizes how valuable Berkshire's assets are. But someone thinking there is no premium and expecting prices to hold up will likely be disappointed.

Regards, DTM
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