The Motley Fool Discussion Boards
Stocks B / Berkshire Hathaway
|Subject: Re: Influence on ROE in Investing returns||Date: 10/10/2012 10:18 AM|
|Author: mungofitch||Number: 194803 of 218923|
I don't think this is necessarily true....
I agree, it's not necessarily true for any given company.
A company with lots of debt will do better with inflation, one with net cash will do worse, and so on.
But on average across the economy inflation is a pass-through,
except at times that it's so high that the economy just plain breaks.
It's true for the "average" common or garden company.
Certainly to a first (and probably second) approximation you definitely don't need to add inflation rate to your desired ROE.