[HN Gopher] Warren Buffett seeing 'substantial inflation' and ra...
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Warren Buffett seeing 'substantial inflation' and raising prices
Author : lisper
Score : 32 points
Date : 2021-05-03 19:06 UTC (3 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| randomopining wrote:
| Yet he doesn't invest in Bitcoin. Why?
| permalac wrote:
| Same reason took him years to invest in tech, he only invest
| where his understanding makes him confortable.
| taberiand wrote:
| Seems to me he understands Bitcoin, and thinks it is hot
| garbage
| 2OEH8eoCRo0 wrote:
| >"Cryptocurrencies basically have no value and they don't
| produce anything. They don't reproduce, they can't mail you a
| check, they can't do anything, and what you hope is that
| somebody else comes along and pays you more money for them
| later on, but then that person's got the problem. In terms of
| value: zero."
|
| - Warren Buffett
| Salgat wrote:
| I hold 6 figures in cryptocurrencies but it's really hard to
| argue with Buffet on this. After over a decade they're still
| almost entirely used for speculation. The only major real
| world use outside trading is on the black market.
| Unfortunately there's no signs of that changing anytime soon.
| How many more decades do we have to wait for cryptocurrencies
| to revolutionize how we transact?
| brtkdotse wrote:
| Same reason he never invested in Beanie Babies.
| twiddling wrote:
| I am long in Pet Rocks
| yks wrote:
| Because contrary to popular belief, Bitcoin is not any more a
| "hedge against inflation" than any speculative stock?
| bko wrote:
| I found his comments on the Fed policy and its affect on big
| tech's stock performance interesting and wrote about them over
| the weekend [0]. In short, according to him a big reason the
| largest tech companies are up 60+% since beginning of 2020 is due
| to low interest rate policy of the Fed. Low rates juice equity
| returns and the biggest beneficiaries are large tech companies
| with really strong cashflow and low capital requirements. The 5
| largest tech companies now comprise nearly 25% of the S&P500.
|
| This was the single largest line item of covid spending. $3
| trillion of the $12 trillion has gone directly into asset
| purchases (treasuries and mortgage backed securities) [1]
|
| Another interesting thing I read about is how companies work
| around inflation. You see this in candy bars where the company
| shrinks the size of the bar rather than raise prices, eventually
| creating a "king size" to accommodate higher input prices. Other
| examples of include cutting corners and using cheaper material.
|
| [0] https://mleverything.substack.com/p/where-did-
| the-12-trillio...
|
| [1] https://www.covidmoneytracker.org/
| devoutsalsa wrote:
| Reminds of the pressure to do away with big candy a few years
| ago. Instead of having one "King Size" candy bar, we'll cut it
| in half & provide 2 "Sharing Size" candy bars. [1]. Instead of
| getting fat by yourself, stay skinny with your friend, unless
| you are your own best friend.
|
| [1]
| https://www.npr.org/sections/thesalt/2012/02/15/146929211/go...
| Scoundreller wrote:
| > Low rates juice equity returns and the biggest beneficiaries
| are large tech companies with really strong cashflow and low
| capital requirements.
|
| Shouldn't it _really_ juice okay companies with high debts? Or
| with high capital requirements because the interest cost on
| capital projects just went down?
| bko wrote:
| They would have to refinance to benefit from lower interest
| rates. And you have this additional credit variable. It would
| definitely cause some companies to change their capital
| structure, essentially increase leverage to benefit from
| lower rates. But I don't think this would help companies with
| existing debt more than less levered companies
| LatteLazy wrote:
| Respectfully, he's an expert at individual companies, not macro
| trends. He's done a lot for the average man by inspiring people
| to invest and recommending appropriate literature. But he isn't
| an actual prophet...
| missedthecue wrote:
| He's not predicting macro trends. He runs one of the worlds
| largest industrial companies, and he's saying that they are
| seeing skyrocketing input costs.
|
| He's not prophesying anything. He's sharing facts that have
| already happened.
| halotrope wrote:
| I think you are confusing Buffett with Burry. Keep in mind that
| he chairs a massive conglomerate and has insights in a lot of
| industries. His remarks where observations, not predictions.
| nabla9 wrote:
| The Fed has new inflation target policy so they are not going to
| act for a while.
|
| There should be transitory spike 3% or more (core PCE price
| index) then slow down to 2.5% or so for most of 2021. (PCE can
| jump to 4% temporarily).
|
| Then it will slow down again and Fed will again struggle to
| maintain desired level of inflation.
|
| ---
|
| Even journalists seem to understand terms only syntactically.
| Assent inflation is not related to price inflation. They have
| completely different mechanisms. Asset inflation does not
| increase wages or anything like that.
| [deleted]
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