How to protect yourself from inflation · Transcript

WarrenThe best protection for inflation is your own earning power. I mean, somebody that is a first-class surgeon or lawyer or teacher or salesperson or anything else, whether the currency is seashells or paper money or whatever, we'll do all right in terms of commanding the resources of other people. So your own earning power is the best hedge against inflation. And the second best hedge is to own a wonderful business, not a metals business necessarily, not a raw material business, not a minerals business, but a wonderful business. And the truth is, if you own Coca-Cola, if you own Snickers bars, if you own Hershey bars, if you own anything that people are going to want to give a portion of their current income to keep getting, and it has relatively low capital investment. to it so that you don't have to keep plowing tremendous amounts of money in just to meet inflationary demands, that's the best investment you can probably have in an inflationary world. But inflation is bad news for investors under almost any circumstances. You can argue that if you own some business required very little capital investment and had real flexibility of price during an inflationary period so that people will continue to give up a half an hour of their own work every month to buy your product. And you leveraged it, then you might even beat inflation to some extent. But leverage is not our game. But we try to own good businesses. I think that Berkshire would not do as well during high rates of inflation at all all as it does in real terms, as it does in periods of low inflation. But I think we would do better than a good many companies.