We Study Billionaires - The Investor’s Podcast Network TIP438: Berkshire Hathaway Masterclass w/ Chris Bloomstran
Apr 10, 2022
Chris Bloomstran, a legendary investor from Semper Augustus, shares his expertise in valuing Berkshire Hathaway. He discusses the current valuation trends of the S&P 500 and the impact of major tech stocks on market returns. Bloomstran analyzes Berkshire's strategic acquisitions, like Alleghany, and the insights from Warren Buffett's recent letters. He also explores how inflation and interest rate hikes affect Berkshire's operations, while emphasizing the importance of understanding intrinsic value and long-term investment strategies.
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S&P 500 Valuation Insights
- The S&P 500's profitability surged, with high ROE and record profit margins.
- However, retained earnings primarily fund share buybacks, not growth, limiting long-term returns.
Investing Advice
- Dollar-cost averaging into a low-cost index fund is suitable for non-professional investors.
- However, those with substantial capital should be cautious of richly priced markets.
S&P 500 Return Drivers
- S&P 500 returns over the last decade were heavily driven by multiple expansion and margin growth, not sales.
- Future returns may be lower, given current high valuations and margins.