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Buffet warns inflation heating up { May 3 2004 } Original Source Link: (May no longer be active)
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Buffett warns inflation 'heating up'
Billionaire declares it the investor's enemy
Reuters, Associated Press
UPDATED AT 8:01 AM EDT Monday, May. 3, 2004
OMAHA, NEB. -- Billionaire investor Warren Buffett said on Saturday that inflation was "heating up" in the United States.
Speaking at the annual meeting of his Berkshire Hathaway Inc., Mr. Buffett told shareholders that the companies best suited to this environment will be ones that have unique products and services or are less dependent on purchasing inflation-sensitive goods.
"Inflation is the enemy of the investor in real terms," Mr. Buffett said. He suggested that one way to protect oneself against inflation is by investing in U.S. Treasury inflation-protected securities.
Mr. Buffett's company owns dozens of businesses, including insurer Geico Corp., apparel maker Fruit of the Loom and ice cream chain Dairy Queen.
He also said he has no plans to change his investment strategies, even if he has made a few mistakes along the way.
"If we were doing it all over again, we'd probably do it over again the same way," Mr. Buffett said. He took questions from some of the 19,500 shareholders at Berkshire's annual meeting, held at Qwest Convention Center in Omaha, Neb.
Over the past year, Berkshire nearly doubled its profit to $8.1-billion (U.S.) from $4.2-billion in 2002.
Mr. Buffett said his strategy will continue to include reading about companies and analyzing their potential.
The so-called Oracle of Omaha has built an empire investing in brand-name companies that he understands and staying away from high-tech stocks, which he said he doesn't understand.
He recalled that many investors ignored common sense several years ago when the stock market was surging at an unrealistic pace, led by the boom in tech stocks. It's an era Mr. Buffett referred to as "when the world went mad."
"What we learn from history is that people don't learn from history," he said.
But Mr. Buffett acknowledged that he has made what he considers mistakes at the helm of Berkshire, including a reluctance to buy large amounts of Wal-Mart stock several years ago.
"I cost us about $10-billion," said Mr. Buffett, the world's second-richest man according to Forbes magazine, which has estimated his worth at $42.9-billion.
Mr. Buffett stressed that, for all of his success in investing, mistakes are inevitable.
"If every shot was a hole in one, you'd lose interest in the game. You have to hit a few in the woods every so often to make it interesting."
Mr. Buffett dissuaded shareholders who were asking whether to invest in hedge funds and one considering investing in initial public offerings of stock. He also assured shareholders of Berkshire's solid future in a time of corporate collapses and economic uncertainty.
"Berkshire, I think, is in an extraordinarily strong position [to weather] times of disaster," Mr. Buffett said. "We've had cash and we've had courage, when the rest of the world was panicking."
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