No. of Recommendations: 5
“ Here's my simple suggestion:
(1) Calculate a smoothed book value for Berkshire. Once per year take the last four annual reports, calculate book per share for each year, and average the four numbers. No need to get fancier. No need for an inflation adjustment or looking up quarterly numbers. It doesn't matter if you accidentally skip doing the calculation one year, or do it every quarter, just do it "whenever you remember".
(2) Calculate how much of that smoothed book value you own. Your current number of shares times that smoothed book per share figure.
(3) Each quarter, calculate how many dollars worth of stock to liquidate: 2.5% of the number calculated above.”
Thanks for developing and posting this, Jim. A simple, elegant system. I’d been messing around with the “withdraw a % of smoothed IV growth” idea. It works too, but is a lot more work. This is easy, I’m in.
