Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (34406)	3/15/1998 9:02:00 AM
From: Rosemary	Read Replies (1) \| Respond to of 176387

Lee, That's the first thing I saw when reading his report. I can't wait to see how some sentence somewhere in that report will be all turned around tomorrow. They'll find it. Quack!

To: Lee who wrote (34406)	3/15/1998 9:46:00 AM
From: Rosemary	Read Replies (1) \| Respond to of 176387

Lee, This is the part I liked when Warren was talking about companies that buy back shares: How We Think About Market Fluctuations A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves. But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the "hamburgers" they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices. For shareholders of Berkshire who do not expect to sell, the choice is even clearer. To begin with, our owners are automatically saving even if they spend every dime they personally earn: Berkshire "saves" for them by retaining all earnings, thereafter using these savings to purchase businesses and securities. Clearly, the more cheaply we make these buys, the more profitable our owners' indirect savings program will be. Furthermore, through Berkshire you own major positions in companies that consistently repurchase their shares. The benefits that these programs supply us grow as prices fall: When stock prices are low, the funds that an investee spends on repurchases increase our ownership of that company by a greater amount than is the case when prices are higher. For example, the repurchases that Coca-Cola, The Washington Post and Wells Fargo made in past years at very low prices benefitted Berkshire far more than do today's repurchases, made at loftier prices. At the end of every year, about 97% of Berkshire's shares are held by the same investors who owned them at the start of the year. That makes them savers. They should therefore rejoice when markets decline and allow both us and our investees to deploy funds more advantageously. So smile when you read a headline that says "Investors lose as market falls." Edit it in your mind to "Disinvestors lose as market falls -- but investors gain." Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other. (As they say in golf matches: "Every putt makes someone happy.")

To: Lee who wrote (34406)	3/15/1998 1:04:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Lee, that excerpt underscores something I've been pounding the table about: P/E's are meaningless when used in a vacuum. What WB was really pointing to was: 1) when interest rates fall, valuations increase; and 2) when earnings expectations increase, valuations increase. This isn't rocket science! It's really simple to see. So the guys that start screaming about companies being so expensive when compared to their historic P/E valuations have never taken the time to analyze what really drives the market. Regards, Paul