very good read
Man, this guy can really write and write. Anyway, I think it is a good read, as it makes people think about the investor psychology of some return value, like 10% or 12%. I don’t think he does a thorough job of demonstrating that the mean reverting 12% equity return is real though, and does not go up or down 1% or 2% as inflation changes by that much. He just makes that assumption and writes everything based on that.
He’s preaching passive while being the biggest activist manager out there.
lol yea. just read it. i thought the same thing as ohai. i lulz at the long term rate of inflation at 7%. capital gain taxed annually. and focused on the average stock (he a stock picker). klaud, what i learned from studying cos is that most cos are pos. you really gotta cherry pick cuz most of them start to suck and get more debt.
but anyways lots of gems. like the simile on stocks as bonds with super long term 12% returns. and a bunch of others. anyways gratata stuff. thx igor.
we need a compilation of his best writings! btw my rich buddy and his bro (50m) just invited me to the berkshire meeting. i always wanted to go cuz i feel that dude going to die soon but never wanted to go by myself and dont really know anyone down. lol anyone been. i heard i can get by with just 1 brk.b stock. lol
I’m going to Omaha with a few friends.
He’s really not a macro guy, none of his success is built on top down analysis and Munger has clearly stated as much. So while it’s always interesting to hear his POV as a guy that’s smart, been around for awhile and carries a very grounded perspective, sometimes you have to take it with a grain of salt. That said, this article used a lot to say a little and really lacked much substance besides, 1) yes, there is often a lag in inflation pass through and some of that will depend on market discipline 2) investors had far fewer options to reallocate capital to back then and 3) periods of elevated stagflation driven by single commodities external to that particular economy (ie the 70’s when he wrote this) are bad.
#2 and #3 are big points. Level of inflation matters, time lag matters and cause of inflation matters. If the inflation occurs in a localized market from a source beyond that market (mid east oil) you can wind up with stagflation in which you experience cost inflation without a positive output gap which presents flow through of price hikes. Overall, this was early vintage Buffet (the bio in the illustration showed he was still holding the original BRK as one of his largest holdings, a textile firm that went bankrupt under him).
how much does it cost all in? like i bet ticket prices and hotels and rental cars skyrocket around that time. any tips to cut costs?
aroudn 3 to 4 of us are going i think.
It’s hard to do on short notice without getting price gouged because Omaha isn’t really built to handle that amount of activity the other 364 days a year. We got a pretty sweet house through air b’n’b because we have 5 and I booked my flights a while back and they were the most expensive part. We are just planning on using Uber. If you book things around late summer it’s typically a lot better. I just registered yesterday for the 5k and may have to move my flight as a result so I’m sure I’ll get murdered on that charge.
is there stuff to see besides the meeting?
ok flights costs for me at least 180 bucks thursday to sunday. i mtrying to decide whether to make it longer.
all 4 star hotels are gone. a day’s inn is about 140 bucks/night. 2 queens. is airbnb comparable? its like 10 miles away. just checked air bnb closer you are to the place the more poppin the price
do you usually rent a car or do u uber around? i think i prefer renting a car. about 30 bucks a day to rent.
sounds like 350. once i split with budddies not including the berkshire purchase. but i plan to put like 2k to 5k for that.
I’ve asked this question before but why is inflation permitted, and by definition permitted to occur? I’m not looking for standard textbook responses on what causes inflation, im asking from out of the box why we do not protest the stealing of our money.
i think inflation is good. it destroys people who choose not to invest. it takes away from people who arent valuable. inflation is a good way to keep the system healthy!
I feel like there’s an event list out there somewhere but I’m having trouble finding that.
Here’s the 2017 guide, I think they’ll have an updated one for 2018.
http://www.berkshirehathaway.com/meet01/VisGuide2017.pdf
Beyond that it’s just hanging out drinking and the 5k on Sunday.
We just uber. I forget flights are a lot cheaper from there, from BOS it’s pricey.
Controlled inflation is not stealing your money, you should by and large get it back through even risk free investments (TIPS, Gold). It also acts as a safety moat to deflationary cycles.
I’m not sure what’s more appalling here. The fact that you think people being destroyed is “good” or that you think investment is even a “choice” for many.
^^brooo, i just threw up reading this textbook response haha. what i’m getting at is why do we even allow this to happen and thus force us to protect against such erosions. what is the problem with money remaining flat or better yet, deflates causing an increase in the value of your savings…
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Hard to be more clear than deflationary spiral. They cover them in some of those textbooks as in my response.
i dont mean it in that way. just poor choice of words. i just feel that competition is necessary to keep things efficient. when inflation is high the people who are most useful thrive while the worthless get left behind and are forced to close up shop. with that said, i believe there should be a safety net to catch the failures with like ubi and also to impose equal access to opportunity like education and what not.
its kind of like people are living far longer than before but have no money so they are forced to work far longer than they are useful.
Also, my textbook response pointed out three things. 1) Your argument is flawed since even risk free (TIPS, Gold) invested money does not erode under managed inflation so there’s nothing to protest 2) Obviously this encourages investment and thus growth and 3) As a moat against deflationary spirals.
Asking for an explanation of economics then complaining that it’s not provided with bright colors and loud noises makes no sense.
Not an argument, i’m just asking to look at the topic through the lens as someone who hasnt been brainwashed from years of academic finance. TIPS is based on core cpi no? You think this truly tracks true inflation? Gold is volatile and logistics are probably a nightmare. What’s more, what i am getting at is what if you didnt need to partake in these activities. The money you have in the bank - and i presume people keep money in the bank instead of 100% going towards investments - kept its value. instead of most investments starting as a hedge against inflation, we just attack the underlying issue - inflation.
As for deflationary spirals - i think history has shown hyperinflation is by far more a danger than deflation. If we are honest, who can name multiple periods of deflation without looking it up? That said, i bet we all can name countless examples of inflation. That said, suppose we do enter a period of deflation - meaning you can buy things for less, is that such a terrible thing when compared to the alternative.
Before the hounds jump in and refute all the reasons deflation is bad, understand i am not an advocate of such a scenario. Rather, i am just raising the question why we allow inflation without putting up a fight.
The Great Depression, deflationary spiral.
There haven’t been a lot of them but it’s like comparing nuclear war to conventional wars. Sure, conventional wars have done more damage and we’ve only dropped two atomic bombs but it doesn’t take a “brain washed” academic to look at the untreatable collapse of a deflationary spiral and say, you know what those are worse.
It’s also akin to pointing out that floating currency shifts erode value while ignoring the major breakdowns of pegged currencies.
As far as “what if you didn’t need to partake in those activities”. The money in the bank, could easily be set in any risk free asset that would keep its value so you’re arguing a pointless hypothetical. You’re also ignoring point #2, low inflation breeds growth by encouraging investment.
The “logistics of gold” are not a nightmare and neither are tips, especially in the ETF age. The only reason you’re shying from “academic” reasoning is that you’re applying a ridiculously overly simplistic view of monetary policy.
Explain to me how CPI does not track inflation? If you point to medical costs or education sub-indices A) they’re in there and B) to the silliness of the point, because you’re conflating supply / demand issues with monetary policy.