Warren Buffett's 1979 Letter to Berkshire Shareholders - Animated

It's 1979. Inflation is painfully high. What's one to do?

00:00 - Inflation hit 14% this year!
00:18 - What should we invest in during periods of high inflation?
00:23 - Maybe bonds?
01:07 - Are stocks the way to go during high inflation?
02:00 - The misery index (inflation + tax)
02:36 - Berkshire's book value per share, gold and oil
03:41 - The disappointing textile business (turnarounds seldom turn, focus on great businesses)
04:50 - Companies get the shareholders they seek and deserve

Choice quotes:
"That combination - the inflation rate plus the percentage of
capital that must be paid by the owner to transfer into his own
pocket the annual earnings achieved by the business (i.e.,
ordinary income tax on dividends and capital gains tax on
retained earnings) - can be thought of as an “investor’s misery
index”. When this index exceeds the rate of return earned on
equity by the business, the investor’s purchasing power (real
capital) shrinks even though he consumes nothing at all. We have
no corporate solution to this problem; high inflation rates will
not help us earn higher rates of return on equity"

"One friendly but sharp-eyed commentator on Berkshire has
pointed out that our book value at the end of 1964 would have
bought about one-half ounce of gold and, fifteen years later,
after we have plowed back all earnings along with much blood,
sweat and tears, the book value produced will buy about the same
half ounce. A similar comparison could be drawn with Middle
Eastern oil. The rub has been that government has been
exceptionally able in printing money and creating promises, but
is unable to print gold or create oil"

"We intend to continue to do as well as we can in managing
the internal affairs of the business. But you should understand
that external conditions affecting the stability of currency may
very well be the most important factor in determining whether
there are any real rewards from your investment in Berkshire
Hathaway"

I can never do the full letter justice. Read it here.

[candyfloss]

Please make a series of such videos on every years’ annual letters of WB to BH shareholders.

[Atemi]

Hi, great colloctions it will be awsoem if you make for the Buffet Partnership letters

[lengjaiz]

Really finding these videos insightful. Please keep sharing your reads with us!

[dindledoo]

awesome video! I'm thinking of doing animation on buffett's letters to shareholders too. Any advice?

[RichReads]

Happy new year everyone!
I'm curious to know, what do you guys believe are good investments to make during times of high inflation?