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Warren Buffett: 2 Ways To Protect Yourself from Inflation! | Berkshire Hathaway 2009


WARREN BUFFETT: Now, the best protection against inflation is your own earning power. If you’re the best teacher, if you’re the best surgeon, if you’re the best lawyer, you know, whatever it may be, you will command a given part of other people’s production of goods and services no matter what the currency is, whether it’s seashells, or reichsmarks, or dollars.

So your own earning power is the best, by far. If you’re the best journalist, whatever it may be, you will get your share of the national economic pie, regardless of the value of whatever the currency may be, as measured against some earlier standard.

The second best protection is a wonderful business. You know, if you own the Coca-Cola, trademark, Company, you will get a given portion of people’s labor 20 years from now and 50 years from now for your product. And it’s doesn’t make any difference what’s happened to the price level, generally. Because people will give up three minutes of labor, whatever it may be, to enjoy, you know, 12 ounces, you know, of a product they like.

Those are the great assets, your own earning power first, and then the earning power of a wonderful business that does not require heavy capital investment. If it requires heavy capital investment, you get killed in inflation.

And with those guidelines, I would tell you the best thing to do is invest in yourself. Charlie?

CHARLIE MUNGER: Yes. The young man should become a brain surgeon and invest in Coca-Cola instead of government bonds. (Laughter)

WARREN BUFFETT: I get paid by the word. He doesn’t. (Laughter)


~ Please visit the site above for full video of Berkshire Hathaway Annual Meeting.


[YAPSS Takeaway]

Best protection against inflation:

  1. Your own earning power.

  2. Invest in wonderful business that does not require heavy capital investment.

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