“On or before December 31, 2029, Berkshire Hathaway A shares (BRK.A), shall trade at no less than one million dollars ($1,000,000) per A equivalent share” Detailed Terms »

CHALLENGER
D Joshi

STAKES $400

will go to Decatur Public Schools #61 Education Foundation if Covault wins,
or Feed The Children if Joshi wins.

Covault's Argument

Over the course of the past 52 years, Berkshire Hathaway (BRK) has experienced an annual average growth in market value of 20.4%. Assuming BRK continues the philosophy of not issuing dividends but instead invest revenues in acquiring additional assets or repurchasing BRK shares, BRK will continue to experience similar market value growth as realized the past ten to fifteen years. Assuming an annual average growth over the next thirteen years of 11.5%, BRK will obtain the million dollar mark per A equivalent share. I am hopeful that Mr. Buffett will live to see the day.

Joshi's Argument

Thank you for placing this challenge. I do not believe that the value of these shares will reach 1,000,000 USD by the date in question for the following reasons:

1) A significant amount of value within the firm is placed on a key individual. The circumstances of that individual may change - but I sincerely hope not!

2) My own calculations show that with reasonable momentum I would expect the value at 2029 to be around 550k - 625k at the top end. At the very bottom end with smaller momentum I estimate the value to be between 200k to 250k, around the current levels.

3) If significant momentum is experienced over a prolonged period, I would expect the value to reach 920k by Dec 2029.

4) I anticipate there to be several externalities in the intervening years that will disrupt momentum.

Good luck sir !

Regards

D. Joshi