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    Value Investing Buffett's 1999 Fortune Article

    December 29, 2020

    Value Investing Buffett's 1999 Fortune Article

    Buffett's 1999 Fortune Article

    Posted: 28 Dec 2020 12:21 PM PST

    https://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm

    I think this article is worth reading every year or so. This is one of four? of Buffett's famous op-eds related to market levels. They've all somehow been very prescient in a short timeframe. I highlighted a few quotes I thought was interesting below. One of the more notable facts I gathered was that interest rates were 6% back in 1999! People were choosing to buy equities at crazy valuations rather than getting 6% risk free.

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    DOW JONES INDUSTRIAL AVERAGE Dec. 31, 1964: 874.12 Dec. 31, 1981: 875.00

    If government interest rates, now at a level of about 6%, were to fall to 3%, that factor alone would come close to doubling the value of common stocks.

    If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate--repeat, aggregate--would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%. If you strip out the inflation component from this nominal return (which you would need to do however inflation fluctuates), that's 4% in real terms. And if 4% is wrong, I believe that the percentage is just as likely to be less as more.

    (The actual 17 yr return from Nov 99 was 4.6% with divs reinvested)

    submitted by /u/redditusername003
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    Sovereign credit ratings

    Posted: 28 Dec 2020 01:10 PM PST

    Does anyone here follow sovereign credits and can provide me some basic information?

    The main questions are:

    1. If a country has issued debt in its own currency, it means can also print that currency and repay it. What exactly does a bond rating mean for the issuer in this case?

    2. If it's not evident from the answer to #1, what causes credit ratings to change? When they downgrade a country's debt, like the US had some years ago, Canada in the early 90s, etc., what are they looking at?

    3. Why did Russia default on debt that was issued in rubles? Was it harder for them to manage the exchange rate if they issued more, which would presumably lower the value of their currency, and hurt consumer imports?

    submitted by /u/financiallyanal
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