Subject: Re: Vintage Warren
Does this also mean that, in terms of P/B, the intrinsic value is around a P/B of 1.70?
If so, this would be higher than what I (and probably some others on this board) have assumed in the recent past (intrinsic value = around 1.5 or 1.55 X book value).
Could it be, at least in part, for this reason that Mr. Buffett asks us to no longer rely on increases in book value to estimate Berkshire's performance and that book value is a 'metric that has lost the relevance it once had'?

The degree to which book value tracks intrinsic value over time is, as far as I can tell, no worse than it ever was.
The two can be expected to drift apart at some point, but I haven't seen it happening yet.

However, the key bit is "no worse than it ever was". It was never perfect.
Book value per share drops sometimes, as some stock positions have lower market prices.
I would argue that all such drops are "errors"...the value of a share of Berkshire is not lower during a market dip.
Indeed, the rate of value generation is probably boosted on most such dips as capital is allocated at good rates of return.

Consider: Real book per share at end March was 5.3% below its peak to date five quarters earlier.
It's pretty certain that the real value of a share is higher than it was then.

So, I think any mismatch you're seeing at the moment is more reflecting the fact that book value hasn't really risen in a while,
despite the fact that value per share HAS risen. This has always been a limitation of book value as a yardstick.
Any valuation metric using mark-to-market values for the stock portfolio will have similar problems, unless you do a lot of smoothing.

FWIW, using a smoothed valuation metric (16 quarter WMA, so heavier weight on recent quarters), the current stock price is at a valuation level within 1% of its 10-year average.
The purpose of the smoothing is to eliminate "fake" value dips in bear markets, while still adapting (albeit with a little bit of lag) to recent financial results.
The time lag due to my data smoothing averages 1.4 years.

Jim