So your reply to me, Paul Senior, got off to a constructive and informative start. You made your points regarding why you prefer the use of p/bk and, irrespective of my views on that ratio, you're not going to change that preference.
And that, of course, is ENTIRELY your own prerogative.
I didn't write what I wrote in an endeavour or expectation to change your own modus operandi. I put forward a proposition that I thought may be of interest to you, or anyone else, as to the relevance of the p/bk ratio targets that you submitted in your previous post.
And then, unfortunately, IMO, the post degenerates into that old similar scenario about 'me' "going 'round and 'round on this" or "just wasting time here" or "(I) keep offering a counterpoint to (your) view" apparently because "(I've) done that many times already" .... and so on....
It seems that there's an inclination on your part to resort to what I referred to in the second last paragraph of my PM reply to your PM.
I thought that was a thing of the past when I received and read your post #56488 with its constructive tone and contents ....
And one last point, when someone replies to someone else, it doesn't just have to be a post to that individual and no one else. Yes, you are a long standing and no doubt respected member of "Value Investing", which, very likely, contributed to your appointment by SI as its Moderator (something, by the way, that I readily and publicly supported --> Message 22038751 ).
However, there are many OTHER SI members who frequent this board. There are also a reasonably steady stream of newcomers. I'm sure that there are also others who read the posts on Value Investing but who don't publicly contribute that often. Maybe what I said had some interest or use for them, there again maybe it didn't.
I just put my opinion(s) and comment(s) out there .... they fall where they will.
Judging by the replies one sees I wouldn't be surprised if other Value Investors do much the same as they comment about posts made between other parties.
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Anyway, enough of that topic ...
You asked me the following question, "If you are using book value to make a buy decision, then you don't seem to have a data point now that indicates a reversal, so you would not be buying BRK at this time?"
The reason why there's no data point on that chart for "Book Value per Share", up to the present time, is because that graph was obtained from a web site and that was their last data point. That composite was more about an objective process rather than an up-to-the-minute buy or sell action.
My personal preference, with regard to interrogating a stock such as BRK.A, would be to rather look at its chart of Retained Income (RI).
Based on the reasonably basic Balance Sheet equation of Share Capital+Retained Income = Total Assets-Total Liabilities, and also bearing in mind that BRK'A's Share Capital is "virtually constant", it's going to be the algebraic addition of RI that should influence Book Value.
So with that in mind, I have the following graph of BRK.A's Retained Income for the last 12 years, with the last year an extrapolated one using the numbers from the last 3 Quarters and "extrapolating" for the 4th. Quarter in order to arrive at a 12 month number for 2016 ...
Here we see a healthy upward projection of RI, influencing Book Value. So the financial fundamentals of the company appear sound.
At the current time we see a fall off in BRK.A's share price. Is that a "logical" result based on its fundamentals ? Personally, I'd say, "No". I'd say that's more than likely due to Ben Graham's "Mr.Market".
So, if that's the case, I'd go with Buffett's recommendation of using Mr.Market to "serve" one and not to "instruct" one.
So you asked, "would I be buying at this time ?"
I, personally, would refer back to what my mentor told me many years ago, where he recommended that the best time to buy a company's shares is just after its financial results come about because, in his opinion, that's when one knows most about its "financial affairs".
Therefore I would hang on until I saw BRK.A's next 4th. Quarter numbers, which, in turn gives us its more comprehensive Annual.
I would then track its share price .....
....until it reversed its current sideways trend where it appears to have support at around $193 000.
Once it broke UP through its current downward sloping trend line, and confirmed that move, I'd be a potential "buyer", seeing as the direction of its price would then, IMO, be in line with its basic financial fundamentals (that is if I had over $200 000 available which, unfortunately, is unlikely {;-( ).
In fact, as a general rule regarding BRK.A, I'd probably always be a potential buyer when its share price went appreciably down contrary to the quality of its financial fundamentals.
It would then just be a matter of "timing" .... |
