A periodic look through the archives of the greatest investor in history In Berkshire Hathaway’s 1979 Letter to Shareholders, Warren Buffett talked about the impact that inflation and taxes can have on an equity portfolio and a business. Below is an excerpt from the letter.
Contrarian guru David Dreman says the Federal Reserve has been playing a dangerous, unsuccessful game by keeping interest rates so low for so long. But he says there are ways for investors to cure the “easy money hangover.”
Inflation has been picking up lately, and in a recent Seeking Alpha column Validea CEO John Reese looks at how you can use the advice of Warren Buffett and Joseph Piotroski to keep your portfolio ahead of the inflation curve.
Could 2014 finally be the year that long-simmering inflation fears boil over? Wells Capital’s Jim Paulsen thinks it just might be. “In the last five or six years we’ve been worried about nothing but deflation and weak growth,” Paulsen tells Yahoo Finance’s Breakout, “so it’s very difficult to imagine that we might get to a point where we’re worried about an overheated economy again, but I think we’ve got a shot at that (this year).”… Read More
Jeffrey Gundlach thinks interest rates will soon rise, but, unlike fellow bond guru Bill Gross, he doesn’t think inflation is upon us. Gundlach, in a web seminar, recently said that a paradigm shift has occurred in the past five years or so, according to AdvisorOne. “Over the majority of the [past three decades or so] we’ve seen a benign inflation period characterized by stable to falling interest rates,” he said. “It’s quite likely interest rates… Read More
Top fund manager Mihir Worah of PIMCO says not to be lulled into complacency by the low inflation we’ve seen in recent years. “We expect global inflation over the next three to five years — or even the next five to 10 years — to be higher than it has been over the last 20 years,” Worah says in an interview posted on PIMCO’s site. “While we do not expect double-digit inflation, we do see… Read More
Hedge fund guru David Einhorn says he increased his bullish bets last month, but remains concerned about several issues, including the Federal Reserve’s low-interest rate policy. In a conference call with Greenlight Capital Re investors, Einhorn said that he increased his bullish positions thanks to better-than-expected corporate earnings results, Bloomberg reports. But, he added, “This enthusiasm is tempered by our continued concern about the structural sovereign-debt problems in Europe and Japan, a slowing Chinese economy,… Read More
Last week, we highlighted a MarketWatch column that referenced a new study showing that stocks, against conventional wisdom, have actually served as poor hedges during periods of marked inflation. But a closer look at the study shows that that is far from the whole story. The study was performed by Elroy Dimson, Paul Marsh, and Mike Staunton of the London Business School, who over the years have performed some of the most in-depth research ever on… Read More
In his latest column for RealMoney.com, Validea CEO John Reese says inflation can be a big hindrance to good investing returns, and highlights one industry — pharmaceuticals — that has the power to beat back inflation. “If inflation were Wile E. Coyote then its Road Runner might well be the pharmaceutical industry,” Reese writes. “An AARP study found that of drugs used most by older Americans, prices rose nearly 26% from 2005 to 2009, which… Read More
Conventional wisdom is that stocks are a good hedge during inflationary periods. But some prominent financial researchers say the belief is off the mark. “When inflation has been moderate and stable…equities have performed relatively well,” Elroy Dimson, Paul Marsh, and Mike Staunton of the London Business School write in the 2012 Credit Suisse Global Investment Returns Yearbook, according to MarketWatch’s Howard Gold. “When there has been a leap in inflation, equities have performed less well… Read More