Dear Garden State Trust:
The recent record inflation is frightening. What stocks should I be buying to protect my portfolio?
As it happens, a Berkshire Hathaway shareholder posed that exact question to Warren Buffett and Charlie Munger at this year’s shareholder meeting, held in Omaha on April 30. She observed that Berkshire Hathaway prospered during the high-inflation years of the 1970s, a period with similarities to today’s economy.
Mr. Buffett responded that the best investment one can ever make is in one’s own talents. Sometimes that involves additional education, sometimes not. Someone who is the best at anything, whose skills are in demand in good times and bad, will not have to worry about inflation. Mr. Munger concurred.
That’s a very good answer, although it sidesteps the question, of course. Buffett offered no prediction on the future of inflation, saying that no one can know with confidence the course of inflation or the economy in the coming year. In truth, there can be no simple answer response to your question, because your current holdings, time horizon and risk tolerance all come into play in developing a portfolio strategy.
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