Inflation Protection Archives

Genius at Work

Warren Buffett’s annual Berkshire Hathaway shareholder letter provides insight into investment strategy worthy of consideration by all investors. This year’s letter, celebrating the 50th anniversary of Berkshire Hathaway under Mr. Buffett’s management, is no different. The following six insights may prove especially valuable to the individual/independent investor.

1. Stocks offer better long-term inflation protection than interest-bearing securities.

Gold speculators cause extreme fluctuations

Following the global financial crisis of 2008, the Federal Reserve Board took unprecedented steps to prevent bank failures, insure credit availability, and stimulate recovery. These successive bouts of “quantitative easing” fanned inflation fears as we experienced depressed interest-rate levels last seen in the 1950s. 

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation.” – Open letter to Fed Chairman Ben Bernanke signed by 23 economists, fund managers, and political strategists, 11/15/2010