Buffett on low interest rates

I recently came across an article written by Warren Buffett wrote for Fortune magazine in 1977, titled ‘How inflation swindles the equity investor’. In the article Buffett explains how the high inflation prevailing at the time ‘swindles’ equity investors because corporate returns on equity were consistent at a pretax 12% through high and low inflationary periods. The problem being that companies retained earnings and invested them at 12%, while prices were rocketing along at higher rates.But the article is particularly relevant at the moment, for the points Buffett makes about the reverse case when in the 1950s and 1960s  ‘with...

I recently came across an article written by Warren Buffett wrote for Fortune magazine in 1977, titled ‘How inflation swindles the equity investor’. In the article Buffett explains how the high inflation prevailing at the time ‘swindles’ equity investors because corporate returns on equity were consistent at a pretax 12% through high and low inflationary periods. The problem being that companies retained earnings and invested them at 12%, while prices were rocketing along at higher rates.

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