Summary List Placement
Michael Burry cited Warren Buffett to highlight the dangers of inflation.
“The Big Short” investor highlighted Buffett’s warning that inflation erodes real returns.
Burry studied Buffett as a young man but decided to forge his own path.
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Michael Burry of “The Big Short” fame turned to Warren Buffett to hammer home the dangers of inflation in a Twitter thread on Tuesday.
“Warren Buffett’s #BerkshireHathaway annual letters guided me tremendously earlier on,” the Scion Asset Management boss said.
“During the last great inflation, #WarrenBuffett wrote about the topic at hand, and for those eyeing the future, this is worth revisiting, the 1980 chairman’s letter.”
Burry shared several screenshots from Buffett’s 1980 letter to Berkshire Hathaway shareholders. In the letter, Buffett explained that high rates of inflation act as a tax on capital, discouraging companies from investing by reducing their real returns.
Inflation can also result in investors earning negative returns, Buffett said, because it serves as an implicit tax on their purchasing power, on top of the explicit taxes they pay on dividends and investment gains.
“The average tax-paying investor is now running up a down escalator whose pace has accelerated to the point where his …read more
Source:: Businessinsider – Finance