The Digest #90

Published on December 22, 2021

Buffett on Inflation

“For the debtor government, the weapon of inflation is the economic equivalent of the “H” bomb, and that is why very few countries have been allowed to swamp the world with debt denominated in their own currency.  Our past, relatively good record for fiscal integrity has let us break this rule, but the generosity accorded us is likely to intensify, rather than relieve, the eventual pressure on us to inflate.  If we do succumb to that pressure, it won’t be just the foreign holders of our claim checks who will suffer.  It will be all of us as well.”

— Warren Buffett, 1987 Letter to Berkshire Hathaway shareholders


How inflation swindles the equity investor by Warren Buffett, May 1977. In later years, Warren Buffett’s letters to Berkshire Hathaway shareholders would often include mini-essays on inflation, but his most extensive commentary of the inflation of the late 1970s can be found in this Fortune article. With inflation on the rise again today, investors are struggling with how to protect their purchasing power in the years ahead. Some have opted for gold, a store of value in human societies for thousands of years. Others have looked to the new world of cryptocurrencies and NFTs. Buffett’s 1977 article is sobering for those of us who hope to maintain purchasing power through ownership of common stocks. However, one big difference between 1977 and today is that government policies throughout the rich world are holding interest rates to deeply negative levels in real terms. This might leave stocks, which seem statistically expensive, as potentially the “least bad” option. (Fortune Magazine)

How to throw more money at inflation hedge with year-end hack by Susan Tompor, December 21, 2021. Lately, I have felt like a salesman for the United States Treasury when it comes to I Bonds, not just in a recent newsletter but in conversations with friends and family. Over the past couple of months, articles have appeared in the mainstream media regarding this opportunity to earn an interest rate in excess of 7% over the coming six months (and likely longer if the CPI remains elevated). My recent newsletter outlines the caveats which do exist, most significantly the fact that money is locked up for at least a year. It is hard to see the downside of shifting some savings that would otherwise be parked in bank accounts yielding next to nothing. The last day to purchase I Bonds for issue this year is December 29. (Detroit Free Press)

Why Congress Shouldn’t Be Able to Buy Individual Stocks by Nick Maggiulli, December 21, 2021. It’s not often that one hears House Speaker Nancy Pelosi extol the virtues of free markets, but that’s precisely what she did recently when defending the right of members of Congress to trade stocks. Speaker Pelosi did concede that members should have to report trades. Nick Maggiulli would go further as he describes in this article. He would ban buying, but not selling stocks. My preference would be to allow trading but to require immediate disclosure the next business day of the specific number of shares transacted. Current disclosure is inadequate both in terms of timeliness and granularity as members can report holdings in ranges rather than being required to report specific amounts. Being a member of Congress is an honor and privacy must take a back seat to the public interest. (Of Dollars and Data)

GEICO’s Executive Chairman Tony Nicely to Retire After Decades-Long Career, December 21, 2021. Tony Nicely joined GEICO as a teenager in 1961 and quickly rose through the ranks, eventually serving as CEO for 25 years and as Executive Chairman since 2018. This is an end of an era at GEICO, similar to when Lou Simpson, the longtime investment manager at GEICO, retired in 2010. Nicely has often been praised by Warren Buffett and has no doubt added tremendous value for Berkshire Hathaway shareholders over his long career. GEICO’s CEO since 2020 is Todd Combs who also continues to manage an investment portfolio for Berkshire. (Business Wire)

Can “Distraction-Free” Devices Change the Way We Write? by Julian Lucas, December 13, 2021. Do you have trouble concentrating when you sit down to write? And I mean, do you really have trouble concentrating? If so, some of the ideas in this article might be of interest to you. I get distracted as much as anyone else but typically shutting down my email and turning off all notifications allows me to be productive. If that isn’t enough, there are several interesting products that attempt to remove even the slightest temptation that could get between you and the written word. Of course, a sheet of paper and a pen is the ultimate distraction free solution, but that’s a step too far for most writers today. (The New Yorker)

Hugging the X-Axis by David Perell, December 2021. Some good points regarding the trade-offs between freedom from commitment and what one can gain through commitment in various spheres of life. “As my priorities have shifted, I’ve discovered a tradeoff between the shine of novelty and the consistency of commitment. Western culture over-indexes on novelty. It suffers from commitment phobia. I see this in our culture of digital nomadism, job-hopping among yuppies, and listening to books at 3x speed instead of reading them deeply. Anxiety is the driving force behind this game of hopscotch. The problem is that a life without commitment is a life spent hugging the X-Axis.” (

The 2021 Stratechery Year in Review by Ben Thompson, December 20, 2021. Stratechery is a good source of information on technology topics. Although I am not a subscriber to the daily updates, the author also writes dozens of free articles every year. This post highlights some of the best articles. If you are at all interested in technology, chances are that you’ll find several articles of interest here. (Stratechery)

Cities and Ambition by Paul Graham, May 2008. This essay is particularly interesting to read thirteen years after it was published given the shifts that we have seen during the pandemic. Graham discusses the different messages that cities send to its residents. New York City, for example, tells you to make more money. Cambridge, Massachusetts tells you to strive to be smarter. Berkeley, California tells you to live better. In an increasingly homogenized but rapidly changing society, it is interesting to read about the unique culture of various cities and contemplate whether this will continue in the future. (

The Great Influenza of 1918, April 12, 2020. No matter how many times I hear that we are currently living through a “once in a century” pandemic, I am struck by how stupid that idea really is. When people go on to suggest that the next pandemic is not “due” for another hundred years, it goes from merely stupid to totally asinine. Obviously, the next pandemic could occur in the distant future, but it could also occur next year. The mobility of humanity (and viruses) is vastly greater than ever before, as we have seen recently with the omicron variant. A big part of the “once in a century” fallacy is due to the fact that our last great pandemic took place about a hundred years before the current one. Early in 2020, I read a book about the 1918 pandemic and wrote this review to better understand what took place. (The Rational Walk)


Ten Things About Alexander Hamilton, December 21, 2021. Chances are that you’ll learn at least a couple of things about Hamilton that you didn’t know or had forgotten. Lindsay Chervinsky joins Clay Jenkinson in the first of a series of podcasts called “Ten Things” that will cover various historical figures. (Thomas Jefferson Hour)

The National Football League, December 14, 2021. If you are interested in the business side of the NFL, be sure to listen to this podcast in which Jay Kapoor, general partner of a venture fund and former NFL employee, breaks down the key drivers of how teams operate within a unique governance structure. Also, check out the accompanying research released with the podcast. (Business Breakdowns)

Q&A: Berkshire Buybacks, Company Culture, Sourcing Ideas, Is Geoff Bearish?, December 20, 2021. Geoff and Andrew are back with a few new podcasts this week. In this episode, they discuss Berkshire Hathaway’s buybacks and several other topics. (Focused Compounding)

The Complete Financial History of Berkshire Hathaway

I recently purchased The Complete Financial History of Berkshire Hathaway by Adam Mead. The book is exactly what the title says it is. It is meant for readers to go through the contents chronologically or to review specific years and decades on a standalone basis.

The need for a book like this has existed for a long time. It’s true that shareholders and others who are interested in the company can go back and read publicly available information such as annual reports and shareholder letters. I’ve read the majority of these primary sources myself, often multiple times on different occasions. 

But until now, there has not been one source that presents a complete financial summary of Berkshire alongside the important context provided by Warren Buffett’s annual letters. This is obviously indispensable for someone new to the company, but it is also very helpful for those who have been shareholders for decades. Mead’s work on the financial data for early years predating Warren Buffett’s involvement is based on data sources that clearly took a lot of time to locate and synthesize. 

I am now up to 1991 which is about the halfway point of the book chronologically but not in terms of pages. Later years receive more commentary which I think is because the wealth of source material to draw from has increased dramatically along with Warren Buffett’s fame.

This isn’t an inexpensive book, but it’s currently on sale at Amazon for the lowest price I’ve seen so far, and I can definitely recommend it.

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The Digest #90
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