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So why the disconnect? Could it because interest rates are so low that paying a higher than average multiple is justified? Buffet did say that interest rates are a terribly important variable in the valuation of assets.

The 10 YR TIPS traded at 0.55 today. This is the risk free real return you can get today. My estimate for the 10 YR real total return for the index starting from today's prices is around 2.25. So that's a premium of 1.71% over the risk free rate.


I don't think Buffett would use the TIPS return, but the 10 year Treasury. Stock returns are (to a large extent) not inflation protected either.

Interest rates definitely impact the valuation. If I were offered >10% for a long-term treasury bond, I wouldn't own any BRK at today's prices.
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