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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (2743)	1/21/2001 1:45:35 AM
From: James Clarke	Read Replies (2) \| Respond to of 4690

My interpretation of how to value BRK has two components: 1) the stocks + operating businesses , and 2) the float. Valuing the float is fun and like no other valuation exercise I ever did. But I emerged convinced. Buffett told us how to do it in a recent shareholder letter. I'll stop there. P/E is utterly irrelevant here - it doesn't capture the economics of either of the two components of Berkshire's valuation. I think the previous post by Jacques Newey may have told us why in a way I hadn't thought about before. Berkshire is a tax efficient value creator. You pay taxes on earnings - you don't necessarily pay taxes on increase in intrinsic value. Buffett understands the difference, and until you can (it took me four years to figure it out) this stock is nearly impossible to value.

To: Moominoid who wrote (2743)	1/22/2001 4:50:24 PM
From: Jacques Newey	Read Replies (1) \| Respond to of 4690

David, Re: "But there is nothing more to it than that. Very cheap, free, or negative cost long term loans with occasionally unpredictable high interest payments needed when insurance losses are high." Exactly, and when those high interest payments are suitably infrequent, and Warren gets to play with the "loan" in between, you have the makings for a "Lallapalooza" business. By the way David, do you know where I can get any negative cost, free or even very cheap loans? I know someone in Omaha who is looking for some. The bigger and cheaper the loan the better;). I own BRK/B too. Regards, Jacques