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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.