Warren Buffett's Warning: Inflation Is Already Here! (Should investors be worried?)

Warren Buffett's Warning: Inflation Is Already Here! (Should investors be worried?)

Today I want to have another look at the recent 2021 Berkshire Hathaway shareholder meeting. During the meeting, Warren Buffett an Charlie Munger discussed a wide range of topics, but in this particular video, I want to consider what they had to say concerning inflation.

Inflation is certainly a hot topic in the financial world at the moment as investors wonder if they should worry about possible rising interest rates and a subsequent decline in asset prices. I frequently hear people wondering if inflation is already here, if inflation will rise in 2021, how inflation affects the stock market, and what inflation will do to their investments.

But should investors really be concerned or worried about inflation? And how can they protect their portfolio? I will discuss these questions in this video.

The question of whether investors need to be worried about inflation is widely debated these days. Closely associated with the topic is the subject of interest rates. If inflation starts to surge, it could prompt central banks to raise interest rates – and a rise in interest rates would likely affect asset prices. In fact, Treasury Secretary Janet Yellen very recently commented that “it may be that interest rates will have to rise a little bit to make sure our economy doesn’t overheat.”

Both topics (the risk of inflation and rising interest rates) are very trendy right now and many media platforms come up with clickbaity headlines and spread fear to get clicks. There are YouTubers that cover pretty much ONLY these topics on their channels and keep predicting that the next market crash and hyperinflation are around the corner. That’s how the media industry works but I think these pieces of content do not offer a lot of educational value. So here’s what I want to do instead in this video: I will look at a couple of price indices (lumber prices, steel prices), I will further examine some of the inflation-related aspects Buffett mentioned during the 2021 Berkshire meeting, and I will discuss to how investors should position their portfolios for a rise in inflation (and generally how to deal with inflation risk).

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○ Historical returns of different asset classes - graph is taken from the book “Stocks for the Long Run”

MUSIC:

Chapters:
0:00 Intro
1:26 Inflation: a hot topic
3:22 Why listen to Buffett and Clip #1
5:10 Inflation is here! Lumber prices
7:02 Other raw material prices and Clip #2
9:45 Bank of America Data
10:16 The FED narrative of transitory inflation and Clip #3
13:00 How I adjust my investment approach
15:15 Leon Cooperman vs. Warren Buffett - Companies with pricing power
18:02 Commoditized vs differentiated products and Clip #4

DISCLAIMER:
The content provided on this channel should be considered an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. The stocks and funds discussed on this channel are examples only and may not be appropriate for your individual circumstances.

Before making any financial or investment decisions, I recommend you consult a financial planner or advisor to take into account your personal investment objectives, financial situation, and individual needs.

In no event shall René Sellmann be liable to any viewer for any damages of any kind arising out of the use of any content published on this channel, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages.

I hope you enjoyed the content!

Are you worried about inflation? How do you position your portfolio to inflation?

[davidreinders]

Nice video again Rene! I got to say that the amount of news related to inflation is abundant at the moment. What you said about the highering prices of steel could be the cause of bad supply chains. To take out the possibility of the impact of bad supply chains, I rather look at the gold price. In the past, inflation and gold prices had a strong correlation. At the moment the gold price isn't rising so I think the higher steel prices are due to bad supply chains and the effects of de economy opening up again. That being said, I heard about the Piotroski F-score. A low score means that you should take a short position and a high score means that you should take a long positon. It sounds interesting, it may be an interesting topic to cover in a next video haha. Keep the good work going!