Category: Excerpts

Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to “insufficient private purchasing power.” The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the “deficiency”…

Here we shall have to say simply that all government expenditures must eventually be paid out of die proceeds of taxation; that to put off the evil day merely increases the problem, and that inflation itself is merely a form, and a particularly vicious form, of taxation… ultimately every dollar of government spending must be raised through a dollar of taxation. Once we look at the matter in this way, the supposed miracles of government spending will appear in another light

-Henry Hazlitt in Economics in One Lesson

Source: Pabrai Investment Funds Q1 2020 Letter

Given the information overload that we deal with on a daily basis, there is always a chance of a half-truth or a distortion making its way to our desks or Inbox. Such messages might even come with the caption – HoS, or Heard on Street. 

I am sure all active investors have had to deal with misinformation at some point in time.

Mine was when a friend with many years of professional investing experience suggested buying shares of Chennai Petroleum because Warren Buffett was going to take a stake in the company. It seemed odd that of all investment avenues in the world, Buffett would be interested in a small government-owned oil refinery in India. It turned out he was taking a stake in PetroChina, which, in the investing version of Chinese Whispers got modified to China Petro and then Chennai Petro!

-Salil Desai , Marcellus