2019-04-07 13:39:00 Sun ET
stock market gold oil stock return s&p 500 asset market stabilization asset price fluctuations stocks bonds currencies commodities funds term spreads credit spreads fair value spreads asset investments
CNBC news anchor Becky Quick interviews Warren Buffett in early-2019. Buffett explains the fact that book value fluctuations are a metric that has lost relevance for Berkshire Hathaway over time. At least 3 circumstances lead to this outcome. First, Berkshire has gradually morphed from a company whose assets concentrate in marketable stocks into a unique public corporation whose major value resides in operating businesses. From a fundamental viewpoint, equity stakes represent key parts of corporate stock ownership and control as investors favor liquidity over managerial rent protection.
Second, the new U.S. accounting rules require the current collection of operating companies to be part of book value at a dollar sum far below their current market value. This gross undervaluation may mislead the typical retail investor.
Third, it is likely for Berkshire to reconsider significant share repurchases that take place at share prices above book value (but below the Buffett estimate of intrinsic value). Each share buyback boosts intrinsic value and also constrains the potential uptick of book value.
This combination of circumstances causes the book-value scorecard to become out of touch with economic reality. Buffett hence focuses on the Berkshire market capitalization, and this alternative better reflects business performance in practice.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2017-05-13 07:28:00 Saturday ET
America's Top 5 tech firms, Apple, Alphabet, Microsoft, Amazon, and Facebook have become the most valuable publicly listed companies in the world. These
2018-09-07 07:33:00 Friday ET
The Economist re-evaluates the realistic scenario that the world has learned few lessons of the global financial crisis from 2008 to 2009 over the past deca
2017-12-03 08:37:00 Sunday ET
Sean Parker, Napster founder and a former investor in Facebook, has become a "conscientious objector" on Facebook. Parker says Facebook explo
2019-10-31 13:38:00 Thursday ET
AYA Analytica finbuzz podcast channel on YouTube October 2019 In this podcast, we discuss several topical issues as of October 2019: (1)
2019-10-05 07:27:00 Saturday ET
Treasury Secretary Steven Mnuchin indicates that there is a good conceptual trade agreement between China and the U.S. in regard to intellectual property pr
2019-11-05 07:41:00 Tuesday ET
The Trump administration expects to reach an interim partial trade deal with China. This interim partial trade deal represents the first phase of a comprehe