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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: BRK Overvalued Now?
Date: 05/20/23 5:49 AM
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No. of Recommendations: 39
Particularly for an older investor, if you can now get returns on bonds that are entirely adequate to your needs, then BRK might be arguably too much risk in the short-to-medium term at this price, rather than good value.

The way I look at it, bonds were a terrible deal a couple of years ago---and are now worse.
The reason is that inflation has risen more than the yields, so the real return is lower now, not higher.

This assessment depends on how long you think inflation will stay where it is and the likely average inflation rate during the term of the bond.
But that's the calculation you have to do.

Meanwhile, I still expect a return of inflation + 7% from Berkshire over time. A bit more if I'm lucky, almost certainly not worse than inflation + 6%.
I don't know of any bonds with anticipated real returns anywhere near that level.

Sample arithmetic:
AA corporate bond yields are running around 4.8%. Until better data come in, I'm expecting short/medium term inflation in the 4.0-4.5% range.
With a 25% tax rate, that 4.8% yield would then be a real yield between -0.4%/year and -0.9%/year.
Not very attractive.

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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