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Classic articles, vol. 3 – Inflation and equity prices

IP — Mon, 02 Aug 2010 14:17:36 +0000

Warren Buffett pretty much defined the subject in his classic, 1977 article for Fortune Magazine called “How Inflation Swindles the Equity Investor“. It’s a must-read for any investor, preparation material for a number of finance programs around the world, and all-around common-sense knowledge that most people need.

We haven’t come to this classic by accident: the subject of inflation has been all over major magazines and newspapers recently. Whatever your views on inflation, the article above and the two others inside are very interesting.

In its Winter 2010 edition, “McKinsey on Finance” has a section on “How Inflation can Destroy Shareholder Value”. It’s a valuable learning tool, although it lacks the “aw-shucks” prose so typical of Buffett.

We also found this Sept. 2008 article by State Street Global Advisors on the same subject, albeit more focused on emerging markets. Although Sept. 2008 was in the middle of the global financial crisis – and we had not yet seen the worst of it – the article is also interesting.

GMO Q3 2009 letter

IP — Wed, 28 Oct 2009 14:13:53 +0000

The first 4-5 pages are, let’s put it this way, entertaining for their irony. That said, it’s hard to disagree with Mr. Grantham’s conclusion in the latest GMO letter: concentrate your portfolio in quality U.S. stocks with a global earnings mix. We’d extend that to some non-US quality stocks with diversified earnings sources, of course.

Einhorn at the VIC 2009

IP — Tue, 20 Oct 2009 14:01:30 +0000

David Einhorn of Greenlight Capital is a fixture of the NY Value Investing Congress – and it’s always useful to take some time to read his thoughts. Here’s the latest speech.