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.
2019-01-23 11:32:00 Wednesday ET

Higher public debt levels, global interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy from 2019 to 2020.
2019-10-01 11:33:00 Tuesday ET

The Trump administration postpones increasing 25% to 30% tariffs on $250 billion Chinese imports after China extends an olive branch to de-escalate Sino-Ame
2023-05-28 10:24:00 Sunday ET

Thomas Piketty connects the dots between economic growth and inequality worldwide with long-term global empirical evidence. Thomas Piketty (2017) &nbs
2019-02-01 15:35:00 Friday ET

Our proprietary alpha investment model outperforms the major stock market benchmarks such as S&P 500, MSCI, Dow Jones, and Nasdaq. We implem
2019-08-07 08:32:00 Wednesday ET

Our fintech finbuzz analytic report shines fresh light on the current global economic outlook. As of Summer-Fall 2019, the current analytic report focuses o
2019-09-05 09:26:00 Thursday ET

Yale macro economist Stephen Roach draws 3 major conclusions with respect to the Chinese long-run view of the current tech trade conflict with America. Firs