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Politics : Ask Michael Burke

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To: re3 who wrote (53361)	3/25/1999 9:16:00 AM
From: Freedom Fighter	Read Replies (2) of 132070

Max99, >>Hi Michael...What do you think of Berkshire Hathaway, and b) do you think it can outperform the dow or s and p...? Would a buy on berk and a sell of an index be a thought ? << I know the question was directed to Mike, but I want to put in my 2 cents here. I own BRK since 1988. I think BRK will outperform the S&P500 from here for three reasons. 1. Even though a reasonable case can be made that BRK may be overpriced at 75,000 or so. It is much less overpriced than the S&P500 at 35x earnings. The portfolio of companies that BRK is made up of (in my view) is superior in many ways to the S&P, and the "look through" earnings PE is about the same as the S&P with the addition of General RE. BRK contains almost all high ROE businesses, with little debt, and great promise. Many are worth a premium to the S&P. 2. The insurance operations generate significant profitable float. As constructed, BRK is a sort of margin account except that the float generates profit instead of costing interest. These leads to superior returns. 3. Warren Buffett will allocate that capital and float as well as anyone on earth. The man is a genius and in a position to get deals that others may not. Wayne Crimi members.aol.com

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