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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 21944 
Subject: Re: OT Grantham Sounding AI Alarm
Date: 06/28/26 7:08 PM
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It looks like you have about 1,100 weeks of data (Jan 1995 until Dec, 2015). If not too big of an ask, could you show the other deciles? The first half of the sample (1995 plus 4 to 10 years until 2005 plus 4 to 10 years) includes the Dotcom bust and the GFC, so a pretty tough period.

Actually I have about 6600 weeks, but I figured it's of limited relevance to modern markets. Everything averaged much cheaper back in the day.

For this table I didn't use deciles, since all the interesting stuff happens near the extremes.
Possible summary: really high valuations are a poor bet, but only REALLY high ones. Moderately expensive valuations lead to a wide variety of outcomes. Cheap valuations do very well quite reliably, even "pretty cheap" ones (and also, not visible in this table, cheap valuations tend to pay off pretty quickly).

All figures include reinvested dividends and are adjusted for inflation.

                                 Lowest    Pctl 10    Average    Pctl 90    Highest
Most expensive 1% of time -4.1% -3.9% -3.5% -3.0% -2.9%
next 3% of time -3.9% -3.7% -3.1% -2.4% -2.2%
next 6% of time -3.4% -3.1% -2.1% -1.2% -0.3%
next 8% of time -2.4% -1.8% 0.1% 2.1% 2.3%
next 16% of time -0.5% 0.3% 3.0% 7.4% 8.7%
next 16% of time 1.4% 2.0% 5.5% 9.3% 9.8%
next 16% of time 2.0% 2.7% 7.4% 10.5% 11.2%
next 16% of time 3.5% 4.2% 9.4% 12.5% 12.9%
next 8% of time 5.3% 8.6% 11.9% 13.4% 14.0%
next 6% of time 10.6% 11.8% 12.7% 13.8% 14.6%
next 3% of time 12.7% 13.3% 14.0% 14.5% 14.7%
Cheapest 1% of time 14.9% 14.9% 15.7% 16.6% 16.9%



And I should add that the prior comment about poor past returns starting at valuation levels similar to the current levels since 1995 is more than a bit misleading, since there were few such times. Most of those starting weeks were during or near the dotcom bubble, or were so recent that there aren't 4-10 year forward results in yet, so it's really a sample of one bubble if you squint.

The valuation method used to divide up the weeks is very similar to CAPE, just that the smoothing is a bit smoother than the 10 year average traditionally used.

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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