The Warren Buffett Way - Investment strategies of the world's greatest investor
Buy this book at Amazon.com or try Amazon.co.uk in England, Amazon.ca in Canada, Amazon.de in Germany, Amazon.fr in France, Amazon.it in Italy, Amazon.es in Spain. ASIN=0471177504, Category: Investment, Language: E, cover: PB, pages: 313, year: 1997(1994).
Review © (2004) by interesting-books-selector.com
"Even if tax rates were 90 percent, [Buffett] says, there would be some real return
for owners [of a positive business] if inflation rate were zero.
[...] At a 32 percent tax bracket, with inflation at 8 percent, companies earning 12 percent
on equity return zero to their owners. Traditional wisdom for years assumed that
stocks were the perfect hedge against inflation."
--quote p58 (my copy has ASIN=0471132985) [ed note: owners being the shareholders of a company.]
Buffett also explains why passing on cost of inflation to customers won't help; see more details in the review of earlier edition.
Even with interest rates still very low in 2004, inflation is picking up and an 8% inflation rate is not an unrealistic forecast for a few years from today; guess we could even look out above. How many companies earn more than 12% on equity?
If you are a serious investor, I'd recommend to read this book twice, because it really matters!