Subject: Why Berkshire May Beat The S&P 500
" Investor's Takeaway
Like I said, 20% of my investable assets is in S&P 500 and 12% in Berkshire. I stopped buying all market-weighted indices due to the extreme valuations and concentration levels, but I haven't stopped buying Berkshire, where I see the valuation isn't attractive per se, but it's good enough for me to allocate new capital. Though, I won't be selling one for the other.

Over the next 10 years, I would recommend to own both, but my rating on S&P 500 is hold and on Berkshire is buy. That can change, depending on how each asset performs over the course of next few months. Structurally, both are superb assets, and while S&P 500 TTM P/E of 32 and Shiller P/E of 41-42 makes me feel nervous, markets could stay expensive for years to come. On the other hand side, we don't yet know how successful will be Abel to allocate capital, and whether the $400B cash pile won't continue to cause more trouble than favors.

Simply, if the next 10 years prove to be another tech-led bull run, Berkshire will underperform massively. If the market cracks, we hit a recession or simply if valuations reset, I expect Berkshire to outperform. Why simply not to own both, and be exposed to the both worlds? I may bring my asset allocation between the two closer to 1:1."



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