as many of you may know, there are some serious changes underway about how unrealized gains will be reported. many are complaining that unrealized gain should not be reported in i/s since it is not part of the operations. many are complaining ish not fair. here is a quote from buffett.
In future quarterly and annual reports, the requirement will “severely distort Berkshire’s net income figures and very often mislead commentators and investors” by producing some “truly wild and capricious swings in our GAAP bottom-line.”
Do you agree?
Personally i think this is great. like buffett, i feel that his investments in other companies is a part of his operations. sure it’ll now be more volatile, but that is how the game works so no point in complaining that prices differ from what you feel is right value. anyways thots.!
there are plenty issues obviously. number 1 if a security is not marketable or has liquidity issues, should it be discounted. obviously this opens it to more management manipulation. but this is still more visbility than prior standard. their I/S will crater when markets tank. hahahahahahahahahahaha
I thought this was going to be a new lil wayne song or something. Very disappointed.
So what’s the story here? Companies will have to report mark-to-market PnL and not just realized PnL? Overall, this sounds pretty reasonable for a company like Berkshire, but might be a pain in the @ss because they now have to value, and probably audit or otherwise support their valuations for everything.
yea lol. so for marketable secureiteis its easy. there is still wild volatility. consider brk. they have like 200b in their marketable portfolio. consider a 20% bear market, they would lose 40b dollars. that will now go to their i/s. they currently generate about 40b in net income. so if markets were to tank, it would wipe out there profits. they’ll most likely go negative cuz their operating business will crash as well. so a double whammy. so i sort of understand his reservations, but feel it is fair to make their i/s more volatile, since stock market is a volatile business. during bull market they’ll prolly make bank, so i imagine their pe will fluctuate a lot.
now for non amrketabnle securities they’ll also hit p/l., theyd have to value that shit. lol how annoying. what multuiple do you use? this will be subject to acct manipulation i imagine.
how is this a big deal for any knowledgeable investor that just doesnt look at the EPS figure blidnly
That’s my thought on this. Lots of people freaking out but who doesn’t look at cash flows?
tahts interesting. i was under the impression that old people favored eps, ebitda over say cash flow. is this not the case?
Any value investor is looking at cash flow. Maybe the old timey guys that don’t know what they’re doing look at earnings. Anyhoozle, I’m 34.