Subject: Re: 20 Year Review of Berkshire
Just rereading that and noticed two important errors as well as several typos.

If you bought on 23rd March 2020 and sold 2 years later (not one) on 28 March 2022, you made 125%.

The reference to a previous potential share price by Dec 2021 of $313,513 being too conservative is not the right number. Inflation would have to be taken into account so it was probably not far of the actual Dec 2021 share price.

A noteworthy omission was the boost to book value from the reduction in tax rates which reduced the deferred tax liability and gave book value a big boost in 2017 I think it was.

I would be interested in how others think about factors outside of Berkshire's control. Inflation, tax rates, interest rates will have a strong influence on our future returns. This is perhaps particularly relevant to Berkshire if you believe book value growth of e.g. 7 or 8 percent plus inflation. That is, there isn't a lot of shareholder return to go around. Should taxes rise or if some of Berkshire's large capital intensive businesses suffered from the effects of inflation.

I suspect Berkshire has plenty of magic yet to bring to bear on book value and I am perhaps being too conservative.

Is the consensus that Berkshire can grow book at 7 to 10 percent and avoid meaningful ill effects from inflation?

Let's say both inflation and interest rates average 5% over the next 10 years and the price/book ratio remains constant. And Berkshire grows per share book by 7% p.a.

Option A put the money on deposit at 5% and make zero in real terms after 5% inflation.

Option B invest in Berkshire today. Get 7% book value per share growth plus 5% inflation. In real terms a 7% return.

Obviously B is way more attractive as you double purchasing power.

It therefore comes down to some important unknowns:
1. The future rate of growth in per share book value?
2. The damage done by inflation, if any?
3. How much of a share of profits will the Government decide to take?

My instinct is that 2 & 3 will take a fair clip out of my return. How do you look at this? That is, inflation will cause harm to Berkshire and Government might take a larger share of earnings than they have in the past. But that's fine.

Maybe I might demand a lower price to book value before buying more to compensate for three risks above at current interest rates. And demand an even lower price to book if rates keep rising.

Thoughts?