Author Topic: Buffett, Bogle and Berkshire shareholders  (Read 10064 times)

longinvestor

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #10 on: July 16, 2017, 08:34:20 AM »
Exactly what  boilermaker75 said.

True.

There is another newer stressor in play. Buffett's wards are making bigger and bigger capital allocation moves while Buffett gets all the headlines. Even if they make mistakes, Buffett will take the heat. Flying under the radar is a great stressor for the other capital allocators within Berkshire. Hope Buffett lives on to 100+ and continue to provide air cover! Also one more big crisis where the wards get to make the deals under Buffett's umbrella, how wonderful would that be.


rb

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #11 on: July 16, 2017, 12:51:41 PM »
BRK mathematically should outperform a broad index. Even assuming that the investment decisions weren't very good - obviously an erroneous assumption. Because of its size its holdings are basically an index. However it would be an index in an insurance wrapper, with 100B worth of leverage behind them. Due to this leverage BRK underlying performance beats the index.

Now what i've just said over there is also why BRK's P/B multiple is >1. In the end the relative performance vs an index is influenced by the start and end points of your measurement. If BRK's fully valued it should more or less match index performance. If it's undervalued it should beat. If it's overvalued it should under perform. One reason why the index beat BRK in 2009-2014 is because the index got really cheap in 2009. If BRK's P/B was 3, then I'd be pretty sure that the index will beat BRK no matter what BRK does.

I hope this makes sense.

John Hjorth

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #12 on: July 16, 2017, 02:03:02 PM »
Your post makes perfect sense at least to me, rb.

Without the intention to nitpick your post, insurance float stands at USD 105 B at the end of 2017Q1, and I have a fairly strong propensity to add approx. USD 82 B [deferred taxes] to that amount as leverage, free of cost, and basically free of covenants, if the insurance operation does not start to stray away. [Mr. Jain will see to that.]

Book equity at that time was approx. USD 293 B.

If any of my fellow board members here on CoBF know of a company with similar properties, please contact me.
« Last Edit: July 16, 2017, 02:40:13 PM by John Hjorth »
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cubsfan

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #13 on: July 16, 2017, 02:21:40 PM »
BRK mathematically should outperform a broad index. Even assuming that the investment decisions weren't very good - obviously an erroneous assumption. Because of its size its holdings are basically an index. However it would be an index in an insurance wrapper, with 100B worth of leverage behind them. Due to this leverage BRK underlying performance beats the index.

Now what i've just said over there is also why BRK's P/B multiple is >1. In the end the relative performance vs an index is influenced by the start and end points of your measurement. If BRK's fully valued it should more or less match index performance. If it's undervalued it should beat. If it's overvalued it should under perform. One reason why the index beat BRK in 2009-2014 is because the index got really cheap in 2009. If BRK's P/B was 3, then I'd be pretty sure that the index will beat BRK no matter what BRK does.

I hope this makes sense.

But the price/book on the S&P is 3 .... and BRK should be a superior investment to the S&P if we really
are a collection of "Moat" businesses with superior capital allocation.

And with BRK price/book is 1.4 --- that's why I don't want to go near the S&P with BRK at this price.
« Last Edit: July 16, 2017, 02:23:23 PM by cubsfan »

John Hjorth

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #14 on: July 22, 2017, 09:15:25 AM »
Based on what has been discussed in this topic so far, - especially longinvestor's starting post - I have decided to do a visit to Indexville going forward, in the coming period - it will not be extensive, and it will be on some kind of on/off  basis - when I'm in the mood to do so, so it will take some time.

It's about working on my total ignorance in the area. It's also about what to say to the Lady of the House about what to do with the whole Holly-go-Molly the morning I wake up dead.
”In the race of excellence … there is no finish line.”
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james22

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #15 on: July 23, 2017, 07:28:19 AM »
Needn't be either/or.

I prefer Small Value index funds in tax-advantaged accounts, individual stocks (BRK/MKL/FRFHF) in taxable.

(Only when fairly valued - else bonds, cash.)
BRK, BAM l SV, EM l Fannie Mae, Freddie Mac l Stable Value, Cash Value

John Hjorth

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #16 on: August 08, 2017, 11:35:46 AM »
My visit to Indexville ended the weekend before the last, while reading The latest memo from Mr. Marks : There They Go Again . . . . Again.
”In the race of excellence … there is no finish line.”
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longinvestor

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #17 on: October 11, 2017, 08:04:33 PM »
https://www.cnbc.com/2017/10/11/warren-buffett-decides-not-do-second-wager-against-hedge-funds-citing-his-age.html

After bringing up the second act, Buffett backed out citing his age. Someone else to take the index side?

stahleyp

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #18 on: October 13, 2017, 10:14:43 AM »
I don't really buy Buffett's age argument since he mentioned that he would be willing to do it even if that meant his estate or something else had to settle it.
Paul

longinvestor

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Re: Buffett, Bogle and Berkshire shareholders
« Reply #19 on: October 13, 2017, 10:40:16 AM »
I don't really buy Buffett's age argument since he mentioned that he would be willing to do it even if that meant his estate or something else had to settle it.
He made his point with the bet. The point was "fees". Although the bet was taken in 2007, he has been saying this for almost 50 years. The folks who don't want to be convinced won't. It won't matter even after another 10 years. I kinda see Buffett as being right, this new bet with another guy this time, is tantamount to running the clock on Buffett. Needless to add, it is another fee taker who is betting.

Buffett called out the mis characterization of this bet in the financial media as active versus passive. No it is not. It is about fees. An active manager who does not take any fees has a >zero chance of beating the index. Doesn't that describe Berkshire Hathaway? Conversely, egregious fees will see to it that the index wins, again. That was the bet. The truth hurts, but if you can keep collecting without performing, why stop? 

If there was another bet, if I was Buffett, in addition to the million dollars, I would include the fund manager paying back all of the fees and make the investees whole as well. That point was conveniently overlooked during the last bet with Seides.
« Last Edit: October 13, 2017, 10:53:21 AM by longinvestor »