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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: mungofitch 🐝🐝🐝 GOLD
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Number: of 21939 
Subject: Re: CAPE and BRK
Date: 12/02/23 1:15 PM
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Is there anyplace where you can plot CAPE vs a single stock ?

You probably won't get the result you hope for.

The reason that CAPE has such strong predictive power for forward returns over a multi-year horizon is that the value of the companies a very broad index in a very broad economy can grow in value only as fast as that economy, which is a relatively small and predictable rate. That same reasoning does not work for a single company, which can have sudden changes for the better or for the worse.

There are a few companies with unusually steady economic progress, showing up as pretty steady progress in real earnings per share. A long term chart of their P/E ratios can give you a pretty good idea of the current valuation level. Stockcharts.com is one I use, as you get get charts with rolling EPS and rolling P/E ratios. But even with those you have to understand the business well enough to have an idea of the likelihood of the trajectory continuing into the future a somewhat similar way.

Jim
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This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
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