Author Topic: Buffett's Annual Letter  (Read 21459 times)

AdrianC

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Re: Buffett's Annual Letter
« Reply #50 on: February 27, 2014, 11:42:48 AM »
Confusion is tied to BRK's announcement that they'll buy back their shares at 110% of book value.  (That's roughly $95/share for the "B" shares, about $15-$20 below the usual share price.)  People widely expect that BRK will prop up the price at book value, but that's no guarantee.  Part of me wants to keep selling puts around that $95/share strike so that I'm always ready to scoop up a bargain.

It changed to 120% of book in December 2012.
3rd qtr book was $84.51, so current "buyback" is $101.
We'll find out what year end book was on Saturday. I'm guessing $88, so "buyback" is $105. Trading around $113. Pretty close.
I'm already a bit full with BRK.B, but if it falls to close to 1.2xbook I will buy more.
Do you have a link for that change?  I remember a purchase of a large block of stock back then for close to 120%, but I don't recall that being the new policy.

There you go:
http://www.berkshirehathaway.com/news/DEC1212.pdf

By any reasonable measure BRK should be at > 1.5x book, but it just don't get no respect. I'm betting that it will continue to do well after Buffett and Munger. The worst is that it gets broken up and the value of the component parts realized. Not much downside at 1.2x book for a long term owner.

beltim

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Re: Buffett's Annual Letter
« Reply #51 on: February 27, 2014, 11:44:13 AM »
Well, this thread has wandered all over the place.  I prefer to think of my posts as focused, rather than nit-picking, because I was largely responding to this:

The Dow is absolutely moronic. IBM influences the Dow more than any other company for no good financial reason and the author abuses that to sell his moronic ideas to unsuspecting readers. Pull that graph up with a real cap-weighted broad index and the "lost 1.4 decades" disappear.

This claim is false, as the "lost 1.4 decades" claim is stronger when using the S&P 500 instead of the Dow (proof: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1393519135854&chddm=1381796&chls=IntervalBasedLine&cmpto=INDEXSP:.INX&cmptdms=0&q=INDEXDJX:.DJI&ntsp=1&ei=plcOU_CGN-aeiAKlgwE)
Interestingly, the dates there are from the article that you and Grant argue is cherry picking.  But it uses an S&P 500 high.  If you use a Dow high of Jan 14, 2000 you get Dow outperformance of about 15% instead of about 30% (http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1393534800000&chddm=1401344&chls=IntervalBasedLine&cmpto=INDEXSP:.INX&cmptdms=0&q=INDEXDJX:.DJI&ntsp=1&ei=yoMPU4iMCaGfiQKunwE) If you don't cherry pick the starting dates, the Dow and S&P500 track amazingly well.  Look at http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1393534800000&chddm=4039030&chls=IntervalBasedLine&cmpto=INDEXSP:.INX&cmptdms=0&q=INDEXDJX:.DJI&ntsp=1&ei=eYUPU4D8KoqDiwL3wwE and see that the annualized difference over the last 40 years is about 0.04%)

Bringing the conversation back to the topic of future performance of markets: generally I agree that there can be long periods of investment underperformance.  Over the last 14 years, we're in one.  Of course, probably every 14 year period after a market high involves investment underperformance, so I don't think there's anything special or predictive about that. 

I'd argue that a far more important point than the choice of index is the fact that no one's talked about dividends.  I hate using only the price indices for these sorts of comparisons, since a large portion of returns come from dividends which aren't shown in any of the graphs or articles cited in this thread. 

grantmeaname

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Re: Buffett's Annual Letter
« Reply #52 on: February 27, 2014, 12:30:24 PM »
I'd argue that a far more important point than the choice of index is the fact that no one's talked about dividends.  I hate using only the price indices for these sorts of comparisons, since a large portion of returns come from dividends which aren't shown in any of the graphs or articles cited in this thread.
Certainly. I think the last two or three "Ehrmagehrd lost decade!!!1!!!one!" threads have largely centered around that line of reasoning.

dragoncar

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Re: Buffett's Annual Letter
« Reply #53 on: February 27, 2014, 03:44:52 PM »
I'd argue that a far more important point than the choice of index is the fact that no one's talked about dividends.  I hate using only the price indices for these sorts of comparisons, since a large portion of returns come from dividends which aren't shown in any of the graphs or articles cited in this thread.
Certainly. I think the last two or three "Ehrmagehrd lost decade!!!1!!!one!" threads have largely centered around that line of reasoning.

It was still a lost decade including dividends.  And I don't think we've regained the top if you include inflation.

edit: here's the correct chart... looks like we did hit the inflation adjusted top but that's still a lost decade there


http://seekingalpha.com/article/1867501-inflation-and-dividend-adjusted-s-and-p-500-performance
« Last Edit: February 27, 2014, 03:52:39 PM by dragoncar »

matchewed

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Re: Buffett's Annual Letter
« Reply #54 on: February 27, 2014, 04:31:17 PM »
I'd argue that a far more important point than the choice of index is the fact that no one's talked about dividends.  I hate using only the price indices for these sorts of comparisons, since a large portion of returns come from dividends which aren't shown in any of the graphs or articles cited in this thread.
Certainly. I think the last two or three "Ehrmagehrd lost decade!!!1!!!one!" threads have largely centered around that line of reasoning.

It was still a lost decade including dividends.  And I don't think we've regained the top if you include inflation.

edit: here's the correct chart... looks like we did hit the inflation adjusted top but that's still a lost decade there


http://seekingalpha.com/article/1867501-inflation-and-dividend-adjusted-s-and-p-500-performance

Would a graph like that have closing price along the Y axis? Or would an invested amount be a better measure for whether the decade was lost? Honest question as I know the dotcom bubble and recession both hit rather hard but I'm trying to make sense of the graph.

dragoncar

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Re: Buffett's Annual Letter
« Reply #55 on: February 27, 2014, 05:21:29 PM »

Would a graph like that have closing price along the Y axis? Or would an invested amount be a better measure for whether the decade was lost? Honest question as I know the dotcom bubble and recession both hit rather hard but I'm trying to make sense of the graph.

I think "closing price" is just a misnomer -- it believe the Y axis is invested amount in 1988 2013dollars (since the later earlier values are much higher than nominal)
« Last Edit: February 27, 2014, 05:27:06 PM by dragoncar »

Nords

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Re: Buffett's annual letter excerpt
« Reply #56 on: February 27, 2014, 07:13:50 PM »
Buffett is, what, in his eighties, as is Munger? That means you aren't just betting that he will continue to be a once in a generation investor (a reasonable enough assumption), you're better that all his successor, who will set the strategy for BRKB for most of your and my lifetimes, will also be once in a generation investors. That seems pretty risky to me.
Buffett turned 83 last August, and Munger turned 90 last month.  When Lou Simpson was working for Berkshire, his investments regularly beat the performance of Buffett & Munger.  I doubt that it's "once in a generation" risk.

The hypothesis is that the culture will be maintained by Howard Buffett, Bill Gates, Ajit Jain (in his 60s), the two investment guys (younger than Jain), other board members, and the Berkshire Hathaway portfolio company owners.  In other words, the legacy of Buffett & Munger will give this motley group a reason to continue their value investing habits.  They might not be as good at allocating capital as B&M, and they certainly won't be as articulate or witty, but they could also do a lot better in new areas like tech and real estate.

I'm willing to risk a quarter of my investment portfolio on that hypothesis.

Confusion is tied to BRK's announcement that they'll buy back their shares at 110% of book value.  (That's roughly $95/share for the "B" shares, about $15-$20 below the usual share price.)  People widely expect that BRK will prop up the price at book value, but that's no guarantee.  Part of me wants to keep selling puts around that $95/share strike so that I'm always ready to scoop up a bargain.

It changed to 120% of book in December 2012.
3rd qtr book was $84.51, so current "buyback" is $101.
We'll find out what year end book was on Saturday. I'm guessing $88, so "buyback" is $105. Trading around $113. Pretty close.
I'm already a bit full with BRK.B, but if it falls to close to 1.2xbook I will buy more.
Do you have a link for that change?  I remember a purchase of a large block of stock back then for close to 120%, but I don't recall that being the new policy.

There you go:
http://www.berkshirehathaway.com/news/DEC1212.pdf

By any reasonable measure BRK should be at > 1.5x book, but it just don't get no respect. I'm betting that it will continue to do well after Buffett and Munger. The worst is that it gets broken up and the value of the component parts realized. Not much downside at 1.2x book for a long term owner.
Yeah, that's the one, and rumor was that Ueltschi's heirs were selling his Berkshire shares from his Flight Safety acquisition.  There's speculation that it was 120% because it was a large block of shares in one transaction, and perhaps a little sentiment for Ueltschi's legacy.  It establishes an upper limit for the ratio, but I'm going to keep selling puts with the assumption that significant buying won't begin until 110% of book.  In other words Berskhire is far more likely to bolster the share price at 110% of book than they are at 120%.
« Last Edit: February 27, 2014, 07:21:08 PM by Nords »

grantmeaname

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Re: Buffett's Annual Letter
« Reply #57 on: February 27, 2014, 08:43:47 PM »
It was still a lost decade including dividends.  And I don't think we've regained the top if you include inflation.
It was still NOT a lost decade whether or not you include dividends. The fact that the top of the bubble is the same amount as the more rational valuation of ten years later does not mean that the market is in the same place. Look at something more persistent, or even a smoothed measure of stock price, or even stock price anywhere but the top of the mountain, and it's obviously not lost (and again, even this is apparently after adjusting for inflation because heaven forbid we used a graph with numbers not biased to make our point!)

dragoncar

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Re: Buffett's Annual Letter
« Reply #58 on: February 27, 2014, 09:11:07 PM »
It was still a lost decade including dividends.  And I don't think we've regained the top if you include inflation.
It was still NOT a lost decade whether or not you include dividends. The fact that the top of the bubble is the same amount as the more rational valuation of ten years later does not mean that the market is in the same place. Look at something more persistent, or even a smoothed measure of stock price, or even stock price anywhere but the top of the mountain, and it's obviously not lost (and again, even this is apparently after adjusting for inflation because heaven forbid we used a graph with numbers not biased to make our point!)

Are you suggesting that it's inappropriate to inflation adjust when talking about investment returns?  Why is it bias to adjust for inflation but not for dividends?

If you look at the graph you can see that a decade was lost even if you didn't invest at the top.  The decade was lost psychologically as well as numerically.

Sure we can "look at something more persisten or even smoothed" (as ephemeral as that statement is) because heaven forbid we used a graph not biased to make your point!

I invite you to post this graph for discussion

grantmeaname

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Re: Buffett's Annual Letter
« Reply #59 on: February 27, 2014, 09:16:56 PM »
I'm saying that you have to use the highest point that the market ever achieved in a crazed bubble AND adjust for inflation in order to make the decade look "lost". If you don't do that, it's a relatively low-performing but not exceptional decade, and it's certainly not wasted. For those of us that didn't invest our whole nest egg in a lump sum at the very peak, it wasn't a lost decade at all. It was just fine.

dragoncar

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Re: Buffett's Annual Letter
« Reply #60 on: February 27, 2014, 09:34:55 PM »
I'm saying that you have to use the highest point that the market ever achieved in a crazed bubble AND adjust for inflation in order to make the decade look "lost". If you don't do that, it's a relatively low-performing but not exceptional decade, and it's certainly not wasted. For those of us that didn't invest our whole nest egg in a lump sum at the very peak, it wasn't a lost decade at all. It was just fine.

You do not need to adjust for inflation to see the lost decade.  But if you are going to adjust for dividends, inflation should be included too.  It was a very bad decade
Compared to the promises of our parents generation.  Hence "lost"

Poorman

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Re: Buffett's Annual Letter
« Reply #61 on: February 28, 2014, 10:31:26 AM »
I'm saying that you have to use the highest point that the market ever achieved in a crazed bubble AND adjust for inflation in order to make the decade look "lost". If you don't do that, it's a relatively low-performing but not exceptional decade, and it's certainly not wasted. For those of us that didn't invest our whole nest egg in a lump sum at the very peak, it wasn't a lost decade at all. It was just fine.

It doesn't matter if you pick the highest point or not.  Start at any point between 1996 and 2000 and you'll see that 12 years later you were still in the same spot -- 0% returns.

The people that were fully invested at the peak and held on through all the turbulence were rewarded with losing about 60% of their portfolios by 2008.  If your long term plan is to index invest your way to ER, you need to make damn sure you can stomach those kinds of losses, or that your asset allocation is conservative enough so that you don't lose your mind and sell near the bottom. 

Ignoring reality won't serve you well as an investor.  What will serve you well is always questioning everything, including the advice from index investors that make it sound like this is a guaranteed thing.

arebelspy

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Re: Buffett's Annual Letter
« Reply #62 on: February 28, 2014, 10:39:04 AM »
The people that were fully invested at the peak and held on through all the turbulence were rewarded with losing about 60% of their portfolios by 2008.  If your long term plan is to index invest your way to ER, you need to make damn sure you can stomach those kinds of losses, or that your asset allocation is conservative enough so that you don't lose your mind and sell near the bottom. 

Fully invested, never adding anything along the way, at a cherry picked time (as you say a few words in - "at the peak")... yeah, that's a rough scenario.  No one's denying that.

For the VAST majority though who continued to keep investing all throughout the decade, they did just fine, or better. Therefore for MOST people, it was not a lost decade.  The term lost decade is thus misleading.

If you want to say "lost decade for 'The people that were fully invested at the peak and held on through all the turbulence' " ... okay? 

This advice, intended for someone in the accumulation phase, holds. 

Ignoring reality won't serve you well as an investor. 

Neither will cherry-picking and scare tactics.

What will serve you well is always questioning everything

Agreed.
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Poorman

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Re: Buffett's Annual Letter
« Reply #63 on: February 28, 2014, 11:55:15 AM »
For the VAST majority though who continued to keep investing all throughout the decade, they did just fine, or better. Therefore for MOST people, it was not a lost decade.  The term lost decade is thus misleading.

If you continued investing in equal amounts at equal intervals, sure your overall balance would have gone up, but your RETURNS would have been 0%.  Hence, it was lost decade for stocks.

Also, it's not cherrypicking because I said starting anytime between 1996-2000 you would have seen 0% returns for the following 12 years.  That gives you a multitude of starting points to choose from.

Helping people see the risks in an investment is not a scare tactic.  Based on this thread and others, I'm convinced that many Mustachians don't think about investing through a risk lense at all.  On another thread, you talked about your "six figure mistake" and how it set you back.  Maybe you shouldn't be so quick to write people off that are trying to bring a different perspective.

arebelspy

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Re: Buffett's Annual Letter
« Reply #64 on: February 28, 2014, 12:09:29 PM »
Had I been indexing (and educated around the subject), I wouldn't have made a mistake like that.

Index investing has far less risk than the way most amateur investors invest.
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beltim

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Re: Buffett's Annual Letter
« Reply #65 on: February 28, 2014, 12:12:04 PM »
If you continued investing in equal amounts at equal intervals, sure your overall balance would have gone up, but your RETURNS would have been 0%.  Hence, it was lost decade for stocks.

This is false.  For an explanation, see examples of dollar-cost averaging where the price chart for a given time is more often below the ending point than above.

Also, it's not cherrypicking because I said starting anytime between 1996-2000 you would have seen 0% returns for the following 12 years.  That gives you a multitude of starting points to choose from.

Right, the first example I chose was June 1, 1999 to June 1, 2011.  The S&P 500 was up 2.25%, not including inflation or dividends.  So I guess it doesn't work for "anytime between 1996-2000."

swiper

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Re: Buffett's Annual Letter
« Reply #66 on: February 28, 2014, 12:13:58 PM »
Had I been indexing (and educated around the subject), I wouldn't have made a mistake like that.

Index investing has far less risk than the way most amateur investors invest.

Six figure mistake ... Interested in reading about it. Link?

Poorman

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Re: Buffett's Annual Letter
« Reply #67 on: February 28, 2014, 01:35:03 PM »
If you continued investing in equal amounts at equal intervals, sure your overall balance would have gone up, but your RETURNS would have been 0%.  Hence, it was lost decade for stocks.

This is false.  For an explanation, see examples of dollar-cost averaging where the price chart for a given time is more often below the ending point than above.

Also, it's not cherrypicking because I said starting anytime between 1996-2000 you would have seen 0% returns for the following 12 years.  That gives you a multitude of starting points to choose from.

Right, the first example I chose was June 1, 1999 to June 1, 2011.  The S&P 500 was up 2.25%, not including inflation or dividends.  So I guess it doesn't work for "anytime between 1996-2000."

It's not false because dollar-cost averaging works on the theory that you are buying while prices are falling, thereby getting a lower cost basis.  If you look at the chart, the down periods are mirrored by the up periods, so you would have been averaging into rising markets as well.  That means dollar-cost averaging didn't help achieve any returns over and above what the market achieved - 0%. 

We are using an example where returns are adjusted for dividends and inflation... what economists call REAL returns.  I'm not going to question your numbers, but I don't think they are helpful because we live in a world where stocks pay dividends and inflation eats away at our savings.

Using Yahoo Finance, I was able to determine the historical prices of SPY (S&P 500 ETF) adjusted for dividends:

http://finance.yahoo.com/q/hp?s=SPY&a=05&b=1&c=1999&d=05&e=1&f=2011&g=d&z=66&y=2970

June 1st, 1999 = 99.61 (adjusted price)
June 1st, 2011 = 124.40 (adjusted price)

Total Return = 24.9%

Then using the inflation calculator from InflationData.com and plugging in your time period, we can determine that inflation was 35.8% over those 12 years.

That means the real return for those 12 years adjusted for dividends, fees, and inflation was -10.9%.

http://inflationdata.com/Inflation/Inflation_Calculators/Cumulative_Inflation_Calculator.aspx

arebelspy

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Re: Buffett's Annual Letter
« Reply #68 on: February 28, 2014, 01:46:39 PM »
I guess I'm missing your point then.

Warren Buffet gives bad advice?
One shouldn't invest in stocks because sometimes the returns are only 3-5%?'
People don't make money in the stock market?
It is impossible to have ER'd in the last decade?

Please explain to me what your point is.

Thanks!  :)

Poorman, you didn't respond to this earlier post.

I'm still not sure what your end point is with all this arguing, or what I'm supposed to take away from this.
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beltim

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Re: Buffett's Annual Letter
« Reply #69 on: February 28, 2014, 03:44:35 PM »
It's not false because dollar-cost averaging works on the theory that you are buying while prices are falling, thereby getting a lower cost basis.  If you look at the chart, the down periods are mirrored by the up periods, so you would have been averaging into rising markets as well.  That means dollar-cost averaging didn't help achieve any returns over and above what the market achieved - 0%. 

You may be right about real returns after inflation and dividends, but you're still wrong about this.  If you take your Yahoo data and buy shares of SPY on a regular schedule, I don't think there's a single interval you could pick that would give you negative real returns over this time period.

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Re: Buffett's Annual Letter
« Reply #70 on: February 28, 2014, 04:14:55 PM »
we live in a world where stocks pay dividends and inflation eats away at our savings.

http://www.moneychimp.com/features/market_cagr.htm is a calculator that combines total return and inflation in one place. The downside is that the time-granularity is a year.

For the five 12-year periods starting 1996-2000,  the total inflation-adjusted return is

1996-2007: 113%
1997-2008: 12%
1998-2009: 5%
1999-2010: -6%
2000-2011: -21%

So if I'm interpreting your strict claim correctly, that's at least falsified.

If we reduce the timeframe to an actual decade, then the periods staring in 1999, 2000, and 2001 are the three with negative inflation-adjusted total returns.

I've posted before that my personal inflation-adjusted annualized return for June 1998 to June 2012 was 4.8% per year, while the calculator shows that the market returned only 1.2%. Clearly my regular investment schedule gave me a significant boost; I don't know if that was due to the specific shape of the market over that period, or to the variations in my regular contribution amounts (which were unrelated to market values), but that's at least one example where the benefits of dollar cost averaging didn't get "canceled out".

All that said, your general point that people may be underestimating the risk of the stock market (particularly in the current environment) is well-taken.

I think some of the lifetime risk is reduced by the accumulation period. Those who retired in 2000 had the benefit of 10-15 years worth of redonkulous returns during the accumulation phase to balance out the crappy returns for the next decade. The danger is those who planned to have a 15-year accumulation phase, but then saw in 2000 that they hit their goal only in only 9 years and pulled the plug. (that's really how long it would have taken starting in 1991 for someone with a 55% savings rate, which the Shockingly Simple Math says should take 14.5 years). That's part of why I'm still working even though my investments are currently well above 25x my expenses; I'll be much more comfortable after the next market drop.

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Re: Buffett's Annual Letter
« Reply #71 on: February 28, 2014, 04:30:41 PM »
It's not false because dollar-cost averaging works on the theory that you are buying while prices are falling, thereby getting a lower cost basis.  If you look at the chart, the down periods are mirrored by the up periods, so you would have been averaging into rising markets as well.  That means dollar-cost averaging didn't help achieve any returns over and above what the market achieved - 0%. 

You may be right about real returns after inflation and dividends, but you're still wrong about this.  If you take your Yahoo data and buy shares of SPY on a regular schedule, I don't think there's a single interval you could pick that would give you negative real returns over this time period.

This completely depends on how much you are regularly investing compared to how much you start with.  But here's an example:

If you had $100000 in January 1999, and invested $387.69 per month plus dividends, you would have an inflation-adjusted $100000 in February 2009.*

Peak to trough would start July 2000, upping the investment to $565.96 per month plus dividends, and end up exactly where you started (inflation adjusted).

Thus, any lower investment would have given you negative total real returns.

*Quick and dirty spreadsheet so no promises.
« Last Edit: February 28, 2014, 04:35:48 PM by dragoncar »

Nords

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Re: Buffett's annual letter excerpt
« Reply #72 on: March 01, 2014, 12:36:19 PM »
Confusion is tied to BRK's announcement that they'll buy back their shares at 110% of book value.  (That's roughly $95/share for the "B" shares, about $15-$20 below the usual share price.)  People widely expect that BRK will prop up the price at book value, but that's no guarantee.  Part of me wants to keep selling puts around that $95/share strike so that I'm always ready to scoop up a bargain.

It changed to 120% of book in December 2012.
3rd qtr book was $84.51, so current "buyback" is $101.
We'll find out what year end book was on Saturday. I'm guessing $88, so "buyback" is $105. Trading around $113. Pretty close.
I'm already a bit full with BRK.B, but if it falls to close to 1.2xbook I will buy more.
Do you have a link for that change?  I remember a purchase of a large block of stock back then for close to 120%, but I don't recall that being the new policy.

There you go:
http://www.berkshirehathaway.com/news/DEC1212.pdf

By any reasonable measure BRK should be at > 1.5x book, but it just don't get no respect. I'm betting that it will continue to do well after Buffett and Munger. The worst is that it gets broken up and the value of the component parts realized. Not much downside at 1.2x book for a long term owner.
Yeah, that's the one, and rumor was that Ueltschi's heirs were selling his Berkshire shares from his Flight Safety acquisition.  There's speculation that it was 120% because it was a large block of shares in one transaction, and perhaps a little sentiment for Ueltschi's legacy.  It establishes an upper limit for the ratio, but I'm going to keep selling puts with the assumption that significant buying won't begin until 110% of book.  In other words Berskhire is far more likely to bolster the share price at 110% of book than they are at 120%.
Let me briefly interrupt this debate with a short on-topic post.

I'm going to have to change my perception of the 110%-120% buyback aggressiveness, based on Buffett's latest shareholder letter:
http://berkshirehathaway.com/letters/2013ltr.pdf
Quote
As I’ve long told you, Berkshire’s intrinsic value far exceeds its book value. Moreover, the difference has widened considerably in recent years. That’s why our 2012 decision to authorize the repurchase of shares at 120% of book value made sense. Purchases at that level benefit continuing shareholders because per-share intrinsic value exceeds that percentage of book value by a meaningful amount. We did not purchase shares during 2013, however, because the stock price did not descend to the 120% level. If it does, we will be aggressive.
Even without share repurchases last year, Berkshire still managed to slightly reduce the float.

Thanks, carry on.
« Last Edit: March 01, 2014, 12:38:56 PM by Nords »

arebelspy

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Re: Buffett's Annual Letter
« Reply #73 on: March 01, 2014, 06:20:02 PM »
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AdrianC

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Re: Buffett's annual letter excerpt
« Reply #74 on: March 01, 2014, 07:25:02 PM »
Let me briefly interrupt this debate with a short on-topic post.

I'm going to have to change my perception of the 110%-120% buyback aggressiveness, based on Buffett's latest shareholder letter:

I saw that too. Now if we could just figure out what he means by "far exceeds" and exceeds "by a meaningful amount".
IV "far exceeds" BV.
IV exceeds BV x 1.2 "by a meaningful amount".

Buying at Friday's price could a good deal for a long term investor.

We are already over 25% of net worth in BRK. I'll buy more if it drifts down a bit. Otherwise I'm keeping the powder dry.

Nords

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Re: Buffett's Annual Letter
« Reply #75 on: March 03, 2014, 08:32:45 PM »
Joshua Kennon's take on Buffett's letter: www.joshuakennon.com/warren-buffett-hints-berkshire-hathaway-shares-cheap-stockholder-letter/
Well said.  Sometimes it seems that the only way that Berkshire will ever achieve its intrinsic value is if the company is broken up into its individual portfolio businesses.

In my Berkshire fantasy:
- Both Buffett & Munger announce that they'll step aside to give the new CEO a chance to settle into the saddle while Buffett & Munger are still around to help. 
- The markets will knock BRK shares down 30% in a hysterical over-reaction to the (what they think is "bad") news, exercising all of my BRK puts and giving me another day to buy more shares with spare cash and margin loans.
- The markets will boost BRK shares back up 50% in another hysterical over-reaction to the (what is now seen as "good") news, at which point I'll start selling more BRK calls.
- BRK's new CEO declares a dividend, sending the shares up another 25%, at which point my calls are exercised and I'm back at my original asset allocation.