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I'm trying to grasp the concept of intrinsic value. I'm reading Maggie Mahar's book Bull! right now and it is really great. It's helping me to see how everything works together, the media, the analysts, Congress, Greenspan, the investment banks, and the individual investor. During the tech boom stock prices became unhinged from reality ie fundamental values determined by sales,profits, assets and debt. Or, what another "business man" would pay for your business. But isn't intrinsic value/fundamental value a sort of "liquidation price" concept ie: what would we get if we sold the parts of the business seperately (the real estate, the cash flow, the equipment) and therefore shouldn't the intrinsic value of a company be discounted quite a bit? Once people know you are liquidating??
When this intrinsic value concept is applied to Berkeshire Hathaway it doesn't really work. Berkshire Hathaway is far too large an enterprise for anybody to buy. So must we figure the intrinsic value of each individual business within Berkshire? Is that what some of you intelligent folks have been doing? I'm sorry I was so glib about intrinsic value before but it still seems to be an extremely theoretical concept when applied to something as large as Berkshire which is not likely to be bought or sold in total ever.
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