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Strategies & Market Trends : Buffettology

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To: Moominoid who wrote (2721)	1/9/2001 11:58:47 AM
From: Jacques Newey	Read Replies (1) of 4690

David, I agree with that approach. It will give you a general idea as to how BRK's value compares to that of the overall market (S&P). However, there are some characteristics unique to BRK which can't be quantified or grasped using a simple P/E ratio. I think it is important to understand a business in order to make a wise investment in it. One unique characteristic of BRK is the ability of Buffett to invest the huge amounts of float coming from the insurance subs. This float has very little or no cost to the company. It is like a huge interest free loan. A loan that often times never has to be paid back! The Intrinsivaluator allow you to calculate the effects of that float under various cost and investment rate of return scenarios. Of course, with BRK you have the mighty Buffett investing that float - a very powerful combination. I have learned over the last year or so (am still learning by the way) that if you don't understand float, you can't begin to understand BRK. Playing with various float assumptions, I have begun to understand the beauty of float in growing the value of Berkshire's business. Regards,

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