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

And so the gap has gone in the other direction. matched

And that's why he says that it no longer reflects it. matched

And there's some more complicated reasons as well. matched

Now, you know, he has a pile of over $100 billion in cash that he could use to buy companies. matched

He also uses it to buy stocks, but he also uses it to buy shares of Berkshire Hathaway, which was the investment that he knows. matched

That's right. matched

It exacerbates the gap. matched

And so if he uses some of that money, and he said that he has certain criteria, and he has his own measure of the intrinsic value of the company. matched

So right now, Berkshire Hathaway is trading at something like a 40% or 50% premium to its book value. matched

He said that he has his own idea of what the real value is of Berkshire Hathaway. matched

And when it goes below that, he might use some of that cash to buy it. matched

But when he uses a dollar of the cash on the balance sheet, matched

to buy back those shares, then it widens that gap further. matched

So what he's saying is that that gap is just so big now that he's not going to measure your wealth creation in terms of book value anymore. matched

He's going to use market value in terms of what, you know, whenever you happen to have bought Berkshire Hathaway, if you're a shareholder, you've matched

You've done well over most periods, especially over a very long period. matched

You've become very wealthy owning it. matched

The real wealth that it has created for you is the market value. matched

But people did misinterpret it because they think that he's kind of derided the markets ups and downs and whims and moods. matched

And maybe now he's sort of embracing it more. matched

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