Warren Buffett's Advise on an Inflation Resilient Stock

"If you had to pick one stock to bet on to be resilient in inflation, which one would you choose?" At the Berkshire Hathaway Annual Meeting for Shareholders 2022 Daphne, a young woman from New York City stood up and asked this question. It was her 5th time at the Annual Meeting, and she wanted to know which one stock Warren Buffett would bet on in this inflationary environment and she wanted to know why that particular stock would do well in what would likely be a very difficult market.

Though Warren Buffett had hoped for a question about apple pie, haha, he did give Daphne an answer that was much better than pitching an individual stock (and depending on your admiration for investing maybe even better than a piece of warm, homemade apple pie).

I’ve translated Buffett’s answer and put my own filter on what he said. He talked to Daphne directly but in my translation, I’ll make it business focused. If you want to know what he said without my filter, the annual meeting can be found on YouTube.

His advice is to be exceptionally good at something and be useful to society. And I translate that into: choose to buy stocks in companies that are the best in their industry and select companies that are useful to society. “Extraordinary abilities can’t be inflated away” as Buffett said. Some businesses don’t have extraordinary skills and they will be a lesser product of society. So, look for winners, when you choose companies to invest in and look for companies that are truly useful to society.

Buffett mentioned Malcolm Gladwell, who in the brilliant book “Outliers” describes how talent isn't necessarily pure luck or a gift. In the book Gladwell mentions Bill Gates, who from a very young age had access to computers and coding – unlike most of the kids his age – the 10.000 hours of coding is why he had a unique edge and an advantage when he formed Microsoft. Extraordinary abilities.

He also said that the best investment that Daphne could make was an investment in herself. Knowledge can’t be taxed.

Daphne asked this question because the USA (and large parts of the western world) is experiencing high rates of inflation right now – at the same level as the rates of inflation back in the 1970 and 80’s where Buffett made some of the best investment choices in his career. If you want to learn more about what Buffett did then, read my article about investing during inflation. You might also be ready to gain some of that knowledge that will give you extraordinary abilities and I’ll be honored to teach you how to invest like Buffett. Book a free 30-minute meeting with me.

If your portfolio is in red and you’re feeling anxious these days, read my article about how to cope when the market is really low.