How To Profit As Inflation Takes Off

The housing boom won’t last forever – buy what you can best afford today and watch the economy settle into its post-pandemic rhythm

- Peter Esho

Each year I spend time reading through Warren Buffett’s annual shareholder meeting to see what’s on his mind and where he sees risks in the global economy. I remember attending the meeting in 2007 – it’s a spectacle.

Buffett is not only a great investor but a master businessman. He doesn’t consider himself a stock picker but instead as someone who invests in businesses. His 2021 meeting took place on May 1 and something very important stood out to me. The threat (or opportunity) of inflation.

“We are seeing substantial inflation,” Buffett said. “We are raising prices. People are raising prices to us, and it’s being accepted.”

He pointed to much higher steel costs impacting Berkshire’s housing and furniture businesses.

“People have money in their pocket, and they pay higher prices ... it’s almost a buying frenzy,” he said, noting that the US economy is “red hot.”

I believe inflation is the single biggest current threat to your wealth and quality of life. But it’s also an opportunity. While inflation hasn’t yet been a problem, it is about to absolutely explode.

Threats produce opportunities

John Rockefeller was the richest man in US history. However, what most people don’t know is that before he got into the oil business, he was in a partnership trading commodities, mainly agricultural products, from a warehouse in Cleveland, Ohio. His first big business break came right after the civil war when inflation sent the price of everyday goods skyrocketing.

The northern US states fared much better and reaped the rewards of inflation. Rockefeller and his partners saw their profits quadrupled in the first year after the war.