U.S. Inflation Hits 31-Year High

0
U.S. Inflation Hits 31-Year High
frycyk01 / Pixabay

Whitney Tilson’s email to investors discussing U.S. inflation hits 31-year high; deflating your inflation fears; deflation? Berkshire Hathaway Inc. (NYSE:BRK.B) article; Berna Barshay on retail stocks.

Get The Full Walter Schloss Series in PDF

Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q3 2021 hedge fund letters, conferences and more

U.S. Inflation Hits 31-Year High

1) The Labor Department announced yesterday that U.S. Inflation Hit 31-Year High in October as Consumer Prices Jump 6.2%. Excerpt:

Seth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information

Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More

U.S. inflation hit a three-decade high in October, delivering widespread and sizable price increases to households for everything from groceries to cars due to persistent supply shortages and strong consumer demand.

The Labor Department said the consumer-price index – which measures what consumers pay for goods and services – increased in October by 6.2% from a year ago. That was the fastest 12-month pace since 1990 and the fifth straight month of inflation above 5%.

WTD 11 11 Image 1

Based on many articles I'm reading and e-mails I'm receiving, many folks are freaking out about this.

I'm not...

I think it's a combination of short-term supply chain issues (which will get sorted out), a white-hot economy (which is good for stocks), and U.S. workers demanding and getting higher pay (which is good for America).

Other investors are shrugging this off as well, which is why the S&P 500 Index closed yesterday only 1.2% lower than the all-time closing high it reached on Monday.

Deflating Your Inflation Fears

2) And here's Jason Zweig with a smart piece in the Wall Street Journal about why you should resist the various schemes salespeople are peddling to protect you (supposedly) from inflation: Deflating Your Inflation Fears. Excerpt:

Inflation.

Few words strike more fear into investors' hearts, and for good reason. By eating away at the purchasing power of your assets, inflation is the nemesis of every investor.

Everywhere you turn nowadays, someone is peddling protection: Gold! Bitcoin! Value stocks! Energy stocks! Commodities!

And no wonder: After years of quiescence, inflation has surged, hitting 5.4% year over year in September. With interest rates near zero and governments spending trillions, more of the same seems as unavoidable as nightfall.

3) If you want to worry about some macro factor, here's a contrarian view (which I wouldn't rule out):

WTD 11 11 Image 2

In summary, I spend zero time worrying about inflation (or deflation). If I own good stocks, I'm going to be fine no matter what...

Berkshire Hathaway Article

4) Speaking of which, I was quoted in this Business Insider article about Berkshire Hathaway (BRK-B): Finance guru Whitney Tilson explains why Warren Buffett's Berkshire Hathaway is the ultimate 'stay rich' stock. He dismisses its $7 billion in net stock sales this year, and calls for even faster buybacks. Excerpt:

Berkshire serves as a fantastic nest egg because its shareholders won't get blindsided by any surprises, Tilson said. The former hedge fund manager described it as "the safest stock imaginable" given its fortress-like balance sheet, strong cash generation, diversified cash flows, and the conservative management style of Buffett and his right-hand man, Charlie Munger.

"You're not going to wake up one day and find the stock's been cut in half," Tilson told Insider.

Berna Barshay on Retail Stocks

5) A quick follow-up to yesterday's e-mail, in which I mentioned my friend David Berman and my colleague Berna Barshay's views on consumer spending and the retail sector. Berna sent me this clarification:

I am bullish on the U.S. consumer, but this doesn't mean I'm bullish on retail stocks overall.

I am bullish on the two retailers I wrote about last week, Five Below (FIVE) and Foot Locker (FL), and of course, the ones I've recommended in my newsletter, Empire Market Insider.

But I'm not bullish (or bearish) on retailers as a group – they could go either way for a lot of reasons (supply chain, inflation, valuation, hard comps coming up, etc.).

Retail is a sector where stock picking is essential. Unlike energy or financials, where the stocks all tend to move together, there are always retail stocks that go up – even when the sector is a dog, and vice versa.

Thank you, Berna! Berna's stock picks are beating both the S&P 500 and Russell 2000 indexes since her Empire Market Insider service launched in June, with four double-digit winners. You can click here to learn more about Empire Market Insider.

Best regards,

Whitney

P.S. I welcome your feedback at [email protected].

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
Previous article Bitcoin Price Rise To Continue Into 2022 As Inflation Fears Grow?
Next article Netflix Stock Plummeted After CEO Defends Dave Chappelle, CEO Presumed Dead

No posts to display