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

To: Madharry who wrote (36868)	3/6/2010 8:11:21 AM
From: Keith J	Respond to of 78476

Madharry, On (1), Warren agrees with you. On (2), I agree regarding the overall market but suspect Warren's returns were dragged down by outside factors including (3). On (3), all you have to look at is the Berkshire vs. S&P 500 comparison to see how overvalued the market was by 1999-2000 - S&P 500 returns for 1995-1999 were 37.6%, 23.0%, 33.4%, 28.6%, and 21%. On (4), I don't know if bunk, but it certainly isn't perfect. How about relatively efficient? KJ

To: Madharry who wrote (36868)	3/6/2010 7:15:06 PM
From: Spekulatius	Respond to of 78476

Madharry - 1. Berkshire Hathaway is still way undervalued. I don't think so. based on P/B and PE (especially after the BNI merger) BRK does not look extremely undervalued. 2. The expectation that stock market should return an average of 10% p.a. seems ridiculous when the best capital allocator in the world only returned 11% if one was fortunate to buy shares at a decade low. I think WEB was predicting mid single digit returns for the stock market at about that time. 3. stocks during that 1998-2000 period were way overpriced. No doubt here. most stocks were extremely overvalued but this thread did find stock that were not. 4. the efficient market hypothesis is bunk. The efficient market hypothesis is one of the most faulty hypothesis about investing that I am aware off. Amazing that so many people still follow that teaching. it's sort of like Karl Marx theory in "Das Kapital" ; his prediction about the future of society turned out to be vastly wrong but that di not hinder the progression of his teachings for a long time. Let me add on more: 5)The next Ten years won't be much better for the overall market but we will continue to find value stocks to beat the index.