donmihaihai Wrote:The masterpiece(BRK) from Master(WB) is one of the company that is furthest away from being consistent and what happened to it since 1960s till now?
Consistency is relative. Relative to most other companies, Berkshire Hathaway WAS consistent. From 1965 through 2010 (35 years) book value declined in only 2 years (2001 and 2008). So it made money in 33 out of 35 years. Few companies have such a track record.
And the reason that Berkshire Hathaway has such a track record is because it was itself heavily invested in companies that had such track records e.g. See's Candies, Coca Cola, American Express, Washington Post etc.
And of course the other reason that Berkshire Hathaway did so well was because the money for such investments was obtained cheaply i.e. from the float in trading stamps and insurance premiums. Without the leverage afforded by Blue Chip Stamps and later the insurance float, Berkshire Hathaway would be a lot smaller than it is today. Warren Buffett might merely be just another successful fund manager instead of being THE most successful one.
FFNow Wrote:If the security isn't DCF-able (means cash flow yoy isn't increasing consistently), should we invest in such a company? Are we breaking a rule in the value investing tenant if we invest in companies that are not predictable?
There is more than one way to value a company. If DCF doesn't work, try something else... don't be a man with a hammer. You can't value a steel mill using DCF, for example. That should not stop you from using a different method.
Of course, if none of the tools work, try another company! There are plenty of choices out there.