Graham and Doddsville -- Value Investing In The New Era Message Board

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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote ()	3/3/1998 6:36:00 PM
From: Freedom Fighter	of 1722

The Berkshire Hathaway annual report is due out in a couple of weeks. The Berkshire Hathaway annual report is due out sometime in March. If Mr. Buffett talks about Berkshire stock in this year's report, expect him to be less generous in his appraisal than he was last year. At the shareholder's meeting last year he stated that Berkshire's stock price was more in line with his own appraisal than during the prior year. (1996) He also stated that he would rather own BRK than most other stocks based on value etc. Since then, Berkshire's stock price has advanced very significantly. Based on my preliminary estimate, it now sells at its highest price in relation to look thru earnings ever. After prior stock moves like this, Mr.Buffett has often released statements that tended to put a lid on the stock. It would not surprise me if he did it again. He is just as uncomfortable with overvaluation as he is with undervaluation. Also, expect him to tone down his comments about general market valuations. Last year he stated that investors face the risk of overpaying for virtually all businesses. That was at DOW 7000 and S&P 800. Market gains have significantly outstripped earnings gains since then. Interest rates are only mildly below where they were last year. His view is very likely to be much the same or even more cautious. Unfortunately, when he released that statement last year, the market dropped around 1%. The media must have somehow construed his comments to mean that he thought a decline was imminent when they reported on it. Mr. Buffett was seen the next day on CNBC clarifying the statement. "I was only taking about valuations." "You pay a high price for a cheery consensus." I doubt he wants an encore performance. He will probably limit his comments to something like this: Equity markets are not providing the types of opportunities that we are interested in here at Berkshire.

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