[math-fun] apparent innumeracy in the news
Double take dept.: At first sight this looked like a whopper, but there's an interpretation that actually could make sense (although it also could probably have been better expressed!). ======== Berkshire Hathaway Profit Doubles By Philip Klein Sat Mar 6, 9:22 PM ET Reuters ... "In the 1980s, equity holdings were 114 percent of Berkshire's net worth, but that fell to an average of 50 percent in 2000 to 2003, Buffett said." ...
I don't know anything particular about Berkshire, but as someone who works in the financial industry, my interpretation would be the following: "Equity holdings" here appears to mean holdings by Berkshire of stock in other entities/companies. "Net worth" is defined as assets minus liabilities, and since equity holdings are usually listed as assets, it is conceivable that if there were large liabilities, that this particular asset class was larger than the net worth at some point in the past, but is now much smaller than the net worth. I seem to recall that Berkshire is primarily an insurance holding company, so its potential liabilities could be very large (future claims). You don't want to get me started on insurance companies, but they are primarily state-regulated, not federally-regulated, and have the most opaque accounting of any companies, anywhere. I think that Gov Arnold's choice of Buffet for economic help for California is the dumbest single thing that Arnold has ever done. (Arnold warned Buffet that if he opened his mouth again re raising Cal taxes, that Arnold would have him do 500 situps. I don't think we've heard from him again on this issue.) At 10:45 AM 3/7/2004, Marc LeBrun wrote:
Double take dept.: At first sight this looked like a whopper, but there's an interpretation that actually could make sense (although it also could probably have been better expressed!). ======== Berkshire Hathaway Profit Doubles By Philip Klein Sat Mar 6, 9:22 PM ET Reuters ... "In the 1980s, equity holdings were 114 percent of Berkshire's net worth, but that fell to an average of 50 percent in 2000 to 2003, Buffett said." ...
Berkhire-Hathaway is a stock holding company, not an insurance company. Since it holds stock in other companies, and has a stock value itself, it is common for its stock to trade above or below the combined value of the stock it owns. It is perfectly plausible for its equity holdings to be 114% of its market value. It has never split its shares, and current share price is in the high tens of thousands of dollars. Warren Buffet is the director, and has just issued his letter to shareholders. I'd recommend it as a good read.
I think that we're both right. From Yahoo finance: "Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, the most important of which are insurance businesses conducted on both a primary basis and a reinsurance basis. Berkshire's principal insurance businesses are GEICO, General Re, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group. Berkshire also owns and operates a number of other businesses that offer apparel, building products, finance and financial products and flight services. In addition, the Company operates retail businesses consisting of several independently managed home furnishings and jewelry retail operations." At 11:55 AM 3/7/2004, Tom Knight wrote:
Berkhire-Hathaway is a stock holding company, not an insurance company. Since it holds stock in other companies, and has a stock value itself, it is common for its stock to trade above or below the combined value of the stock it owns. It is perfectly plausible for its equity holdings to be 114% of its market value.
It has never split its shares, and current share price is in the high tens of thousands of dollars. Warren Buffet is the director, and has just issued his letter to shareholders. I'd recommend it as a good read.
A minor deviation from the thrust of this mutex, I am remembering a previous thread in which the concept of negative money was brought into play. Just a thought - surely money based on the complex numbers is by far the more aesthetic norm. Jon Perry perry@globalnet.co.uk http://www.users.globalnet.co.uk/~perry/maths/ http://www.users.globalnet.co.uk/~perry/DIVMenu/ BrainBench MVP for HTML and JavaScript http://www.brainbench.com
I wish I could remember the source: I once read a description of a bank account which paid interest at a rate of i, compounded continuously. So if you start with one dollar, then after time epsilon, you get i*epsilon dollars -- which of course start compounding too, depositing -- egads -- negative interest into the real part of your account! The end result was a lovely and convincing explanation that e^(i pi)=-1. Ring any bells? On Mar 7, 2004, at 5:58 PM, Jon Perry wrote:
A minor deviation from the thrust of this mutex, I am remembering a previous thread in which the concept of negative money was brought into play. Just a thought - surely money based on the complex numbers is by far the more aesthetic norm.
--Michael Kleber kleber@brandeis.edu
participants (5)
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Marc LeBrun -
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Tom Knight