Ultimately the fair value has to have some connection to the price, right? Just not to the short term gyrations of the price.
So, are you simply saying that price is below its long term trend more often than above it?

I think of it as a long run trend of true fair value, and a long run trend of market price. The first line is X% higher all the time.
I agree that the market price and fair value are connected over time, but they don't seem to have a 1:1 relationship on average over time.

The market price is above its own trend line half the time, more or less by definition. But above the fair value line only a small fraction of the time.

For example, imagine you (not unreasonably) think that P/B is still a good-enough yardstick of value most of the time. Let's further say you think true intrinsic value is around 1.53 times book (or whatever), in which case the market price has been "fairly valued" or better only 8.3% of the time since the credit crunch. Very much less than half the time no matter what reasonable multiple you pick.

One line of reasoning for concluding that Berkshire has on average been trading below fair value:
Over the long haul the broad US market has historically generated value for you at around inflation + 6.5%/year, barring changes in valuation multiples. The average return from the average stock in the average year. That's a workable definition of fair value good enough for me: the price that would get you that rate of return over a reasonable forward investment horizon. Since Berkshire has generated a whole lot more value than that in the last X years without getting more expensive, it was undervalued X years ago.

Jim