Spencer Jakab

speaker

981 appearances 14 recordings 1 series first heard Jul 2017 last heard Jun 2021

Spencer Jakab’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Decoding Warren Buffett: Book Value vs. Market Value · 27 Feb 2019 podcast

how optimistic people are about something. matched

And so people were a little bit surprised because Warren Buffett has not really paid a lot of respect to the market. matched

In other words, he's gotten rich off of the market's irrationality. matched

And so people read a lot into this move to say like, well, maybe now he thinks the market is more rational than accounting measures. matched

And is he losing it or is he sort of straying from his views? matched

And that is not the case, but it's easy to think so. matched

That's right. matched

So if you look at what Berkshire was and has become, you get to kind of understand it. matched

He took it over. matched

It was just kind of a failing textile company that he turned into an investment vehicle. matched

And he said when he took it over, the book value of that textile company way overstated the value of the company. matched

It wasn't realistic because textiles were not a good business even then when he took it over. matched

But over time, he bought stocks and bought individual companies, bought Geico and See's Candies, bought Burlington Northern, the railroad, and other insurers. matched

Those companies have become part of Berkshire. matched

There's no market price anymore for those. matched

So he does invest in them. matched

But the book value of those assets has not grown as quickly as the market value of Berkshire. matched

So matched

To put it in round terms, the book value has grown something like a million percent during his tenure, which is pretty good. matched

But the market value has grown something like two million percent since his tenure. matched

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