With each passing day, investors fear more that inflation is here to stay. The messages from the main central banks that the price boom is temporary and a consequence of the necessary economic recovery after the suffering of the pandemic are beginning to fade due to the stubbornness of inflation data that does not stop.
The interannual CPI in Spain in July stood at 2.9%, while in the euro area it was 2.2% and in the US it was 5.4%. Faced with this prospect, investors are looking for places to put their savings to avoid losing purchasing power and, given low interest rates, traditional bank deposits are not an option.
But investment guru Warren Buffett already guided savers years ago on how to act in a situation like the one we are going through today. Asked about it, at Berkshire Hathaway’s 2015 annual shareholders’ meeting he warned of the need to bet on recognized brands, housing and funds that replicate the large indices.
“The best businesses during inflation are the ones that you buy once and then you don’t have to keep making capital investments later,” such as utilities. These types of companies that must make constant capital investments consume “more and more money” , since losing purchasing power due to inflation they need more and more funds to acquire the goods.
For this reason, he prefers to bet on brands that are loved by the consumer, since he will keep buying the brand’s products despite the price boom.
Under the same logic, the ‘oracle of Omaha’ recommends the purchase of real estate. On the one hand, they involve a single outlay for the person who acquires it, and, on the other, when this asset is sold , the price of inflation can be passed on to the sale price , beyond the revaluation that the home or premises may have had. .
Still, Buffett has previously advised small investors to put their money away in low-cost index funds , which already represent significant diversification, largely covering the cost-of-living boom. So far this year, the Ibex 35 grows more than 10%, the German Dax does it 15%, the EuroStoxx 50 increases 17%, while the S&P 500 gains 18%