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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 21939 
Subject: Re: Question for Jim on QQQE
Date: 08/10/26 7:51 AM
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PS: Maybe Jim can check my math.

Well, I'm too lazy to check your math, but that's precisely how I usually do it when I don't go back to build an all new trend line from scratch, except for the dividend part. All of my calculations, including the value growth rate, are price only--it's only at the last step when thinking about likely forward returns that I add an estimate for the yield, which is historically close to 0.5%. So I would normally stop at your figure of $101.80 as a valuation exercise. That doesn't get increased by an estimate of dividends since the baseline figure.

This is probably one of those situations that "approximately right" is good enough. The valuation level is meaningfully above average. Not quite at eye watering 1999 level, but likely by enough that a flat couple of years would not be unexpected for a long term holder.

I really want to go back to the underlying data again to revise the trend line, just ... stuff.

We kind of know what it would say. Profitability has been extreme lately, which would probably make the trend line higher and QQQE seem less overvalued. But I believe the recent upswing in profitability, though large, is probably in large part just cyclical. A good time to update the trend line would be at least part way through the next earnings recession, so the additional data includes both the unusually good recent years and at least a bit of unusually bad.

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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