“If you’re not a little confused by what’s going on you don’t understand it. We’re in unchartered territory.” (Charlie Munger)
Warren Buffett and Charlie Munger were recently asked whether the current boost to fiscal and monetary stimulus will lead to higher inflation, the consequences of which could be significant for the equity markets.
BUFFETT: “The answer is we don’t know...the best we can do is recognise that we don’t know and proceed in a way where we get a decent result no matter what happens.
“We do not think that we can make money by making macroeconomic predictions."
When asked about the conditions currently being experienced by Berkshire companies he said “We’re seeing very substantial inflation. It’s very interesting; we’re raising prices, people are raising prices to us. And it’s being accepted.
“Take home-building. We’ve got nine home builders in addition to our manufactured housing operation (which is the largest in the country). The costs are just up, up, up. Steel costs…just everyday they’re going up…the wage stuff follows...
“It’s an economy really that’s red-hot. And we weren’t expecting it. I mean, all our companies when they were allowed to go back to work…you know, the furniture stores can’t stop people from buying things, and we can’t deliver ‘em. But they say ‘well, that’s OK because nobody else can deliver them either, and we’ll wait for three months’. But the backlog grows.
“We thought it would end when the $600 payments would end [additional unemployment benefit each week] around August of last year. You know, it just kept going, it keeps going and it keeps going.
“I get the figures every week...and it just won’t stop. ………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
Prof. Glen Arnold
I'm a full-time investor running my portfolio from peaceful Leicestershire countryside. I also happen to be UK´s best selling investment book author and a Financial Times Best selling author.
Originally, I wrote all my ideas out in full on this website. Now that ADVFN publish them they are entitled to display the full version for six months – you can see them here. Thus can I only post the first few paragraphs here for anything younger than six months.
I write 2 to 3 newsletters per week - investing is about making the right decisions, not many decisions.