Ruane, Cunniff & Goldfarb Investor Day Transcript 2011

Found via GuruFocus.

Question:

What is the future of the S&P 500 Index as a relevant measure of stock performance in the context of the value of the US dollar and the prospects for inflation?

Greg Alexander:

What Warren said at the meeting, Jonny, the dollar from the 1930s till today is only worth —

David Poppe:

Six cents.

Greg Alexander:

It’s down 94%. But the economy has gone on. The S&P, I guess you could have adjusted it for inflation. I don’t have that. That six cents kind of tells the story, the dollar is down by 94% but we’re still all here.

Bob Goldfarb:

But we’re a lot more prosperous in real terms despite that decline in the dollar.

Greg Alexander:

It’s good to own businesses or things that retain their value as the dollar gets debased.

Bob Goldfarb:

Most of our companies — if you go back to Warren’s seminal article in Fortune, ‘‘How Inflation Swindles the Equity Investor,’’ we think the great majority of the stocks that we own fit that bill perfectly.

Greg Alexander:

I will add that when people talk about inflation they often talk as if they should buy gold or resources or whatever. We think good businesses are just as good.

Bob Goldfarb:

The answer is that the S&P 500 will continue to be Sequoia’s benchmark. You should note that nearly half of the S&P 500’s earnings emanate from outside the US.

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Related previous posts:

Warren Buffett’s Comments on Inflation

Is Warren Buffett Worried About Hyperinflation?

Ruane, Cunniff & Goldfarb Investor Day Transcript (2010)