No. of Recommendations: 6
- longterm provides a modest return, say >=5% after inflation
...
Yeah me too!
I dunno. I can see that the prospect of decent positive real returns with negligible risk and high predictability is attractive. But the traditional "monkey with a dartboard" rate of total return from stocks in the US has been inflation + 6.5%/year, the average return from the average stock in the average year.
Sure, valuations are stretched all over the place so this is a tough starting point. And we've just seen a century of slow trend multiple expansion as a tailwind flattering that number for an average year. Still, guys, let's say a real 7%!
Berkshire is at least rational by cultural tradition, less likely to do something stupidly risky or follow the same institutional imperative as the average firm, so I think they can eke out a half a percent from those mild advantages.
Jim
