No. of Recommendations: 20
I'm just amazed that people are talking about selling shares, writing puts, etc. as if it is a "given" that BRK is going to drop in value. Things can and do change. FWIW I think that $500+ for the B's is right around the corner.
Both can be right. It depends on the time frame.
I can totally imagine the price soaring...for a while. Or not. Who knows?*
But that doesn't change the notion that when valuation levels are higher than usual (for this investment or any other), the forward returns will be lower than usual for a while at some point. Result certain, timing no clue.
In the case of Berkshire, the price might well go up a lot from here for a while, but I can't think of any evidence based reason to *expect* a positive real market return in the next year. Other than "random fluctuations happen all the time". Quick back of the envelope: at the usual growth rate book might be $495000 at the end of the year ($330 per B), and the typical 1.4 times that would be $693000 ($462 per B), which is 4% less than today's price of $719000. So again it's back to time frame: if you care about having a prudently evaluated greater than 50/50 shot at making a profit THIS year, then lightening may make sense, especially if you have a better idea. I think it's fair to say that the odds very slightly favour a higher return from cash, even if it's only 51:49 odds. If your target time frame is longer, ignoring such things can make good sense.
Jim
* One can always try to guess.
The market is certainly exuberant in many ways at the moment, and that tends not to fade very quickly, so the short term might well be up. The "little people" are out in droves...3 of the 4 highest days of retail stock purchases in the last decade were in the last few weeks. Heck, Robinhood even made a profit.
