The Nobel committee deciding on the 2002 prize for economics broke with tradition by awarding it to a psychologist: Daniel Kahneman.
In an adaptation from his upcoming shareholder letter, the Oracle of Omaha explains why equities almost always beat the alternatives over time.
The choice of a discount rate to assess the value of an asset is a challenge for every investor. It is the crucial prerequisite to deciding whether or not an asset should be bought, and is used in conjunction with a reasonable assessment of the likely, sustainable earnings flow at the current price.
Having spent the Christmas period being teased by my teenage kids that I was old, past it and too tight on pocket money, it was a welcome relief to get back to the office - only to endure much of the same! It did remind me however that I had just passed an important milestone, my 25th year as an investment manager; time for panic or perhaps a bit of reflection.
