Subject: Re: BRK Price Drop
I think (apart from Mungo's haircut for what was Apple overvaluation), BRK is and will be caught in the downdraft in stocks, caused by the mismatch between real yields on bonds and stocks.
First approximation, treasuries are yielding 2.4% +/- 10 bps for 5-30 years. Stocks, 4.14% assuming both P and E are automatically inflated. That's a risk premium of 1.74%. This premium has been 4-9% in this century. Either real bond rates have to fall to zero or less, or stock prices have to fall to at most 15 P/E.
I have no idea which one of these two outcomes is more likely, because anybody who has ever tried to predict the movement in interest rates, has always gotten it wrong. Always!