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

To: James Clarke who wrote (443)	10/18/1998 2:52:00 AM
From: peter michaelson	Respond to of 4691

Not sustainable. We'd all like to invest our free cash flow for 20% plus returns. It ain't easy. Doesn't that mean good businesses for less than 10x PE today... and going forward earnings must rise. These guys look like they are doing a great job, but do I think they have a better than 50% chance of continuing at the same rates of growth in earnings - no, I don't. $200 million acquisitions are not small. They don't sell at the multiples of a $10 million business. Just a couple of over-priced acquisitions will upset that glorious track record. Don't get me wrong - I have great respect for Dover's job very well done - couldn't replicate it myself. But to continue at that rate of growth through greater and greater successful acquisitions...ouch. I'd rather move to Oregon and relax!! peter

To: James Clarke who wrote (443)	10/18/1998 12:43:00 PM
From: Tomato	Read Replies (1) \| Respond to of 4691

James, Thanks for all the insight. Would you be a buyer of BRK.A or B at this point, or are the underlying assets, or most of them, too overpriced? If Warren's arteries are clogged beyond hope with too much See's Candies and steaks from his favorite steakhouse, and Munger bites the dust too, what will happen to the stock? Panic selling by some? What premium over the underlying stock and business values is given to the Big Two running things? One other question: are any of the stock holdings of BRK compelling buys at current prices? As someone who knows next to nothing about accounting, a quick look at Freddie Mac's financials makes me think it's at least not grossly overpriced like,say, KO. Then again, if the Buffettology book is right, p/e doesn't matter and maybe KO is not overpriced? Seems to me that you can't overlook p/e, since it's a factor that investors do look at (although with KO getting to a p/e of over 50 at one point, maybe I'm wrong about that). Thanks in advance.