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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: rrr12345   😊 😞
Number: of 21944 
Subject: Re: Dec 31 BV?
Date: 01/17/25 1:17 PM
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„BRK-Price to WMAof BV 1,7"

The main conclusion is that price tracks book value, which is reasonable, and which is proven by the data. The second conclusion is that P/B is sometimes higher than at other times, naturally.

There are numerous ways to analyze price versus BV. Plotting price and WMA of BV together against time is as good a way as any. Personally, after plotting price and BV together against tome, I like to then plot price versus BV (Mathematically, a log-log plot with a power law fit is appropriate when two variables move similarly against time.) That shows how well price follows BV. I can then plot price versus the trendline of the P vs BV plot to focus on the high and low excursions. Doing so makes it easier to see the magnitude of the excursions.

Another thing that I like to do is to use both the high and low stock price during the quarter, in order deliberately to add more scatter to the plots (For example, in Q3 the high price was 19% higher than the low price), and I like to use both the starting and ending book value for the quarter. None of these things are necessary for the analysis, but they do make it easier to see quantitatively how well price tracks BV, and and the magnitude of the excursions.

Anyway, as I say, plotting price and (WMA of BV)*1.7 together against time is perfectly fine, but plotting one against the other as well, and also plotting the ratio against time, makes it easier to see what's happening. Just FWIW.



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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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