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.
2019-10-23 15:39:00 Wednesday ET
American CEOs of about 200 corporations issue a joint statement in support of stakeholder value maximization. The Business Roundtable offers this statement
2017-04-07 15:34:00 Friday ET
Would you rather receive $1,000 each day for one month or a magic penny that doubles each day over the same month? At first glance, this counterintuitive
2019-05-05 10:46:10 Sunday ET
This video collection shows the major features of our AYA fintech network platform for stock market investors: (1) AYA stock market content curation;&nbs
2017-01-17 12:42:00 Tuesday ET
Former Treasury Secretary and Harvard President Larry Summers critiques that the Trump administration's generous tax holiday for American multinational
2023-12-08 08:28:00 Friday ET
Tax policy pluralism for addressing special interests Economists often praise as pluralism the interplay of special interest groups in public policy. In
2020-04-24 11:33:00 Friday ET
Disruptive innovations tend to contribute to business success in new blue-ocean markets after iterative continuous improvements. Clayton Christensen and