Liz Claman of Fox Business Channel quotes or paraphrases the Berkshire chairman and vice chairman:
Question: What is your view of the market’s valuation of Berkshire’s shares? You say Berkshire has 2 components of values - the stocks and bonds…. and the earnings. When you compare 2007 to 2008 - the investments were down about 13% and the earnings were down about 4% - but the value the market was placing on your shares was down 31%
Buffett: We think investments are worth what they’re carried for or we wouldn’t own them. We have no problem with that number. We think the earning power of most businesses was not as good last year as normal. It won’t be as good this year as normal. A few of them have got problems. But most of them will do well and a few will do sensationally. I think it’s reasonable to look at Berkshire as the sum of 2 parts - fairly priced or undervalued securities… and a lot of earning power which we are going to try and increase.
Berkshire was cheaper in relation to intrinsic value in 2008 compared to 2007. Over time, we would hope that both increase - particularly the operating earnings aspect.
Munger: I would argue that last year was a bad year for a float business. But long-term having a large float which you’re getting at a cost of less than zero is going to be a big advantage. If you think it’s easy to get in the kind of position that Berkshire occupies - you are living in a different world.