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To: marginmike who wrote (177379)	7/3/2002 10:44:35 PM
From: mishedlo	Respond to of 436258

On Buffett - From the Fool. This guy is no clown. ============================================================ Recently sent the folowing email to my two sons who also hold BRK in their accounts. I offer it here as another view of holding Berkshire these days. ------------------------------------------------------------- QUOTE Dear Tim & Mike, Rather than the usual chatty email, this one is more serious. Since I have touted Berkshire Hathaway to you for years now and since you have bought shares due to my influence, I feel I must tell you that I have sold all my BRK except for the one framed certificate on my office wall. Why did I do this? About a month or so ago, I noticed that BRK was going down again, and also noticed that It was going down almost in lockstep with the DJIA. BRK has done this sort of thing occasionally before but usually dances to its own tune and to a lesser amount to the market [DJIA, S&P 500, etc] in general. This bothered me quite a bit since I believe [nobody knows, but I have a strong opinion] the market in general is in for a lot of "correction" before it gets better again -- maybe years. Following is a chart of BRKB and the DJIA for the last two months showing their similar declines -- BRKB lately is even dropping relatively more than the DJIA. bigcharts.marketwatch.com Why does this BRK following of the DJIA bother me lately? It is getting more obvious each day that many U.S. corporations have been cooking the books to make themselves look better [have higher earnings] so their stock would go up in the market. Why have so many CEOs and senior corporate managements done this? To make their stock options more valuable [greed]. To make their management efforts look more valuable so they could get unrealistic income increases from their mostly captive Boards of Directors. [again greed]. Power. Ego. Lots of reasons............ On the other hand, good old Warren E. Buffett is the picture of honesty and integrity in corporate management and reporting. So I have no doubts about where BRK is in earnings and such BUT, for some reason, BRK is getting dragged down with the rest in the market place these days. I have ridden BRK down to the depths a couple times in the last few years, even buying at some of the low prices, but just don't want to take the ride again.... Another thing that bothered me was puzzling about why Warren sold that complicated SQUARZ issue which is partially a covered call in mid May. That was Warren betting the stock price wasn't going up too much in the years ahead. Those who bought the SQUARZ apparently sold some BRK short to match their new call positions so the nice upward climb through 78,000/2600 got aborted by the short selling and a new trend took over. If Warren thinks he's going to make money on covered calls, who am I to think he's going to be wrong? Who is anyone? So why does this bother me enough to convert it all to cash? I am facing my 71st birthday in a couple months. I bought into BRK in early 1996. For the next year or two after my main purchase the market value of BRK continued in a generally upward slope at about the 26% annual average it had for twenty or more years -- that's doubling abut every three years -- better than the average bear, to say the least. Now that I'm getting so damn old, I need to be taking some cash out of this investment every year now and, speaking honestly, ever since ole Warren bought that turkey GenRe, the growth of the BRK's market value has been vershimmel. Look at the last ten years of BRKA [log chart so steady trends are straight lines]: bigcharts.marketwatch.com Notice how regular the growth of the price range of the stock was up until 1998 when that albatross GenRe was bought with a massive [~50%] issue of new BRK stock. [That albatross simile is thus far well proven, the future might get better -- Warren keeps saying how it's going to be better next year or so -- Like Pa used to say, "Christmas is coming too."] GenRe has so far lost $6,000,000,000 since we absorbed it, guess GenRe's old management showed us for cancelling their stock options! A lot of the GenRe stockholders didn't like BRK stock either so they sold it in great amounts. That price hangover appeared to go on for at least two years. So much for issuing stock [diluting] to get something cheap. Notice how the price of BRK has gone [at best] horizontal since the GenRe caper -- a company, even Berkshire Hathaway MUST earn reasonable profits or its price [not to mention value] will never go up -- look at the chart since 1998. So much for value per share. If there aren't too many catastrophic losses in the years ahead, GenRe could start showing some reasonable income but there are some "dead years" they'll never make up for....... BRKA USED TO BE a stock widows and orphans could bank on for income. A problem though is that the only way to get income from BRK is to sell some since it doesn't pay dividends. More fun for Warren to sit on the cash waiting for a meatball to come across........ Good big buying opportunities for Warren surely will occur in the next few years as the market gets back to [and probably overshoots and goes below] its historic earnings level relationships. I've mentioned my age a few times in the preceding because the BRK situation is different for you than for me. You guys are much younger than I and can afford to let the averages work out for you before you retire. There are perhaps a few other companies whose stock is a good long-term buy-and-hold but I do not know which ones they are. I believe BRKA/B is still one of the best companies to own a piece of for the long haul. I may not agree with every decision Warren makes but I firmly believe that, besides being one of the most honest CEOs of all time, he is trying to do the best for his fellow owners [stockholders]. In fact, as the market price goes down this time, you guys may want to take advantage of the low market prices [not yet, I think it'll go lower] and add to your IRAs and other retirement nest eggs. Time in on your side; it is not on mine. Well, hope this isn't all too much of a shock but I gotta play 'em like I see 'em. BRK ain't doing much for my old age lately. My future holding BRK also looks mediocre at best. Wish me luck. Call after you digest this epistle and we'll talk about it some more. Love, Dad UNQUOTE Tom