Summary of Warren Buffett’s Views in Fortune (May 1977) :
1. Bond investors stand to lose a lot in inflation, and equity investors are not doing much better.
2.Stocks are analyzed in a similar way to bonds.
3. Returns on equity are more attractive than bond yields in a low inflation environment.
In a low inflation environment, investors get a triple benefit:
- Bond investors stand to lose a lot in inflation, and equity investors are not doing much better.
- Stocks are analyzed in a similar way to bonds.
- Returns on equity are more attractive than bond yields in a low inflation environment.
In a low inflation environment, investors get a triple benefit:
4.Investors demand a higher return on equity than bonds, but in fact, considering five ways to increase roe on equity, Buffett found that roe on equity did not increase in an inflationary environment.
5. Under the same roe, the profit quality of low-leverage companies is much better than that of high-leverage companies.
6. Most companies do not have the ability to shift costs and expand or maintain profit margins in the face of inflation.
7. Low valuations are a protection for value investors against inflation.
8. Peacetime inflation is more a political problem than an economic one.No one can predict inflation accurately.But Buffett does think inflation will remain high for years to come.
9. Peacetime inflation is more a political problem than an economic one.No one can predict inflation accurately.But Buffett does think inflation will remain high for years to come.
10. Peacetime inflation is more a political problem than an economic one.No one can predict inflation accurately.But Buffett does think inflation will remain high for years to come.
11. “Taking from the rich and giving to the poor” cannot provide even temporary help to the poor. The correct approach is to guide capital to invest in modern productivity and improve economic productivity.
12. High inflation increases the cost of capital spending by companies, thereby inhibiting their ability to reward shareholders.
13. In times of high inflation, governments tend to intervene in capital to stimulate capital flows to the industrial sector.