Berkshire Hathaway
An Apology to Durell and Others

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By johannesclimacus
August 24, 2006

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I realize I went over the line in my last couple of posts on this board. My apologies to Durell and anyone else offended. I can usually gauge a bad post by the amount of misspellings and grammatical mistakes in a message. If it averages about 2 or 3 mistakes a sentence, then I thought about it before I sent it. If it averages 5 to 10 mistakes a sentence, then I did not read it - sending it as the thoughts crossed my mind. I can also gauge a bad post on my behalf if many people are offended for reasons that have nothing to do with them being factually proven wrong about an investment thesis. By both of these criteria, the "Durell is shocked" and "Out with Durell in with Vu" post were bad posts.

First, let me say that my suggestion that the FOOL should replace Durell with Tom Vu was a joke. Many people do not share my sense of humor, but I hope that readers of this board (including Durell, if he actually reads this board) can appreciate that the idea was obvious farce. I don't think Durell is a bad investor. Don't really know much about him. His record looks above average, which is difficult to achieve; and looking at his recommendations, I see several stocks - AZO, KO, RCII- which I was interested in at the same time, perhaps for similar reasons. And I also think Markel will be a great investment going forward � better than Berkshire. I think Berkshire is a much safer and better investment in the next several years, however.

Tom Vu is clearly a fraud, but he makes me laugh, and he draws attention to the nature of the "investment advisor" game. It would probably be ruinous to employ him in most investment advisory businesses. The really insidious thing about the investment world, however, is that a myriad of successful, legitimate investment "helpers" are just Tom Vus in disguise. They make their money by getting in-between you and the business you are trying to own. They could be featured on TV programs. They could be writing for some business journal. They could be, and often are, pillars of the community, but they are still just Tom Vus. They are pimps and hustlers. If I sound like a person who has been burned, that is because I have been burned. I am 30, but I have been around the block as both a speculator and an investor in the 15 or so years I have been at it. Being an American capitalist, regardless of how smalltime I am, has been the ride of my life. Along the way I have learned that a great many people (myself included) often don't make sense. I trust no one, except perhaps Mr. Buffett and Mr. Munger, on the subject of investing.

I certainly don't trust the media, especially the Wall Street Journal and the investment TV shows. I don't trust most CEOS. I don't trust investment bankers, especially Goldman Sachs employees. I don't trust any of the people who make their money by getting telling you what to do with your money. That doesn't mean everybody is a crook or a fraud in those occupations. It just means I am going to ask questions when something does not make sense to me from those sources. Doesn't matter who it is. If Durell says something about being astounded that Buffett values Berkshire's float as equity. It doesn't matter to me if people have been wondering about that question in "value investment circles," Buffett made it pretty clear how he views Berkshire's float in the annual reports in years past. All you had to do was read the reports, which are pretty clearly written. On an intuitive level, if someone told me that I could be paid to get returns off of 50 billion in assets, I would say that is BETTER than equity. The value of any asset, after all, is the properly discounted sum of cash that it returns over its remaining life. To get a costless 50 billion in assets without having to issue debt or stock is the same thing as having equity. To get paid to get the returns off of 50 billion in assets is BETTER than equity.

Being a skeptic and having a cynical sense of humor has its advantages. I have probably posted a couple dozen times here. I have, on balance, stated relevant arguments and tried to give hard data and reasoning to support the arguments. In my opinion, I made a pretty clear investment case for why Berkshire is worth far more than it trades for today. I have debunked the theory used by Value Line and a great many lazy analysts that Berkshire can be intrinsically valued based on some sort of historical price to book method. That right there is important because people who think of Berkshire that way may be what holds the stock price down. I have explained why Tim Vick does not know how to pick stocks like Warren Buffett. And why Robert Hagstrom gives a better idea of how to invest like Buffett than Vick does. I have explained why Bruce Berkowitz is correct to think Berkshire is worth 150K.

If I am wrong about these things, then I want to be told why. I would much rather eat crow than poor investment returns. The great value in investment boards is that many eyes scrutinize your ideas. Some of those eyes are sharper than mine. If people don't like me, and want to destroy my ideas . . .all the better, because I continually try to destroy my best loved ideas.

I just got back from fishing for Coho, my favorite fish. This is the time of year in Alaska when they run up the rivers to spawn and die. In great bursts of life, they go to do what is natural and then inexplicably find their dissolution to the elements. They wash back out to the sea as particles, where they were beautiful life before. There is an inherent sorrow to the life cycle, but that very sorrow is what makes life such a joy. Whether we realize it or not, we are all doing the same thing as the salmon. "Some sail upon the sea, some toil upon the stone" (Late and Extremely Great Townes Van Zandt). . . Some buy and sell little pieces of paper for profit. As you swim up the river, don't forget why you swim at all � it's the love and the natural course of things. Whatever your belief system, be very grateful for the dance of life and death. It is the most amazing and inexplicable gift imaginable. And lastly, if you see something shiny that looks good to eat but has a hook in it, DON'T BITE!

Best Regards,
John Climber

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