Warren Buffett on Stock Prices and Fair Shareholder Value

WARREN BUFFETT: Most managements feel that the — on the price of their shares — that the higher, the better. And that's an understandable feeling. But the trouble is the game isn't over at any time.

We really feel the fairer, the better.

Our goal is that every shareholder participates in the progress that Berkshire makes, during — as a business — during their holding period.

In other words, we don't want one party getting wealthy off the other. We want them to share based on the gain in value of the business.

And to the extent that the stock got way overvalued or way undervalued, you know, that may make one party — in the first case, the seller, in the second case, the buyer — very happy. But there's somebody on the other side of the transaction...

To the extent that the stock goes up because the intrinsic value goes up, everyone is getting their fair share of the pie as they go along.

To the extent it exceeds that in some way, the selling shareholder gets a benefit. But the entering shareholder is at a disadvantage. And we really like the idea of the price tracking intrinsic value over time.