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TIP625: Berkshire Hathaway w/ Chris Bloomstran
We Study Billionaires - The Investor’s Podcast Network
Caution against overestimating returns and considering potential negative returns
Borrowing funds at a lower interest rate can boost returns in the short term, but overestimating returns using aggressive assumptions and high inflation scenarios may backfire. If margins and multiples return to historical highs, and sales growth and share count reduction are not achieved, the long-term returns could be minimal or negative. High inflation could lead to profit margin contractions, reducing profits and lowering the multiple, resulting in zero or negative returns. This caution is for institutional allocators or individual investors relying on strategies like dollar-cost averaging into the S&P 500.
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