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Discussion Starter · #441 ·
Warren Buffett explains how to invest in stocks when inflation rises (cnbc.com)

I have seen most of these Buffetisms before but they do serve as a reminder that we should look at real return as opposed to nominal return. As mentioned by another poster elsewhere we are again approaching an all time high for oil but still have a ways to go if we are to hit the true all time high. How many gave themselves a pat on the back after looking at their 2021 performance? How many will be able to achieve positive returns in 2022 after inflation? The market in 2022 thus far cannot be accused of being boring.
 

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Huh, interesting.
For some reason those who voted for carbon tax aren't out in the streets celebrating gasoline prices getting above 2$/l?
That was the entire idea you voted for! Higher prices. Rejoice!
 

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How many will be able to achieve positive returns in 2022 after inflation?
I think it's a mistake to look at single year performance, whether it's nominal or after inflation.

One should only care about multi-year performance, like what's your CAGR over the last 10 years. And then, are you getting a positive return after inflation?

If you look at any shorter time frame, it's too easy to feel disappointed due to natural market volatility. A person's return in 2022 is almost meaningless, just as your return in February was meaningless (it doesn't have anything to do with your long-term results).
 

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Discussion Starter · #445 ·
@james4beach 1 year performance is very short term for an investor and longer performance is what matters. Thanks for pointing out that short time frames are not as important as longer term results. The intent of my post was to point out that everyone is an investment genius when the market offers the returns we saw in 2021. To speak more directly to longer term results many may have been tricked into thinking (myself included) they are able to generate above average returns. Anybody who started investing after the great financial crisis has experienced abnormally low interest rates and amazing returns in the equity market as well as RE. This mindset has taken such a grip on investors that they are abandoning bonds and fixed income to chase yield and higher returns. My IPS includes achieving returns of 2% greater than inflation each year. In the past this has been easy to accomplish. When reviewing my IPS I would often glance over this point or if it did catch my attention I thought the bar was too low and consider raising the number. 2022 may point out the reality that the market doesn't go up every year and that there may be periods where we see poor performance in all sectors. However, capital preservation is a key principal to investing strategies and negative returns (real or nominal) are counter to capital preservation. How does one avoid this while staying invested? I will remain invested in this market as I am still in accumulation. Perhaps, I would act differently if I were at or near retirement. Many do not have COLA'd pensions outside of what the government provides. Having experienced high inflation rates in the past may make our current situation laughable for those that were around in the 1970s

Canada Inflation Rate 1960-2022 | MacroTrends
 

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7.9% inflation in the US for February 2022... Imagine what will be that number for March 2022 with the war that just started in late February.
 
  • Wow
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To me.....collecting the tax only to return it to taxapayers is a waste of resources for administration.

I would prefer they collect the tax and build a fund to mitigate future damage due to climate change.

The costs are rising and as insurance companies withdraw their policy coverage, the government will be under increasing pressure provide the funds.
 

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To me.....collecting the tax only to return it to taxapayers is a waste of resources for administration.

I would prefer they collect the tax and build a fund to mitigate future damage due to climate change.

The costs are rising and as insurance companies withdraw their policy coverage, the government will be under increasing pressure provide the funds.
I would prefer that they only take tax money they need, and make sure they leave enough with the citizens so they can survive. No tax until you make a living wage.

The government arguably only has the moral right to take money from the citizens if it needs it to provide for a benefit to the nation. Taking money they don't actually need is simply wrong.

Secondly climate change is only one problem. They should focus on others, lets say national defense, crime, healthcare, pandemic preparedness, and countless others.
 

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It doesn't look to me like central bank "printing" has lined consumer pockets with piles of cash that spurs demand for limited supplies of goods.

I think inflation is more likely driven by disruptions to the supply chains and worker shortages throughout the economy, and by circumstances beyond our control like the price of oil due to war or damage to crops due to climate change.

At the end of December, 2021 the total debt outstanding in Canada (bottom line of the Statistics Canada credit market summary data table) was $10.017 trillion. At the end of December, 2020 the total debt outstanding was $9.392 trillion. In the 1 year period from the end of December, 2020 to the end of December, 2021 it increased by $624.8 billion. This is an increase of 6.6%.

 

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I would prefer that they only take tax money they need, and make sure they leave enough with the citizens so they can survive. No tax until you make a living wage.

The government arguably only has the moral right to take money from the citizens if it needs it to provide for a benefit to the nation. Taking money they don't actually need is simply wrong.

Secondly climate change is only one problem. They should focus on others, lets say national defense, crime, healthcare, pandemic preparedness, and countless others.
It would be short sighted planning to depend on a "pay as you go" funding policy to mitigate damage from climate change.

The damage is happening and someone is going to pay to fix it...insurance companies, individuals, municipalities, Provinces, or the federal government.

As insurance companies are increasingly bowing out or limiting their exposure.......that leaves somebody else to pay the cost.
 

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I think inflation is more likely driven by disruptions to the supply chains and worker shortages throughout the economy, and by circumstances beyond our control like the price of oil due to war or damage to crops due to climate change.
You think many things about inflation sags. You thought it was transitory. You thought it was good. You thought it was deflation

I listen to the people who have a history of being on the right side and they were bang on here again

It doesn't look to me like central bank "printing" has lined consumer pockets with piles of cash that spurs demand for limited supplies of goods.
When a central bank increases the supply of fiat they are in fact inflating it which causes inflation. Hence the very definition of the word

"An increase in the supply of money is the root of inflation, though this can play out through different mechanisms in the economy. Money supply can be increased by the monetary authorities either by printing and giving away more money to the individuals, by legally devaluing (reducing the value of) the legal tender currency, more (most commonly) by loaning new money into existence as reserve account credits through the banking system by purchasing government bonds from banks on the secondary market."

Supply chains, climate change, labour shortages and whatever other excuses you have are merely secondary factors to the root cause of inflating the supply of the fiat itself.

If we give everyone CAD it doesn't matter how much the climate changes. It's still not good for GICs
 

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It would be short sighted planning to depend on a "pay as you go" funding policy to mitigate damage from climate change.
What is climate change damage?
Building on a floodplain and getting flooded?

The damage is happening and someone is going to pay to fix it...insurance companies, individuals, municipalities, Provinces, or the federal government.
The person who wants to repair the damage should pay.

As insurance companies are increasingly bowing out or limiting their exposure.......that leaves somebody else to pay the cost.
Good.
Maybe if insurance companies stopped covering high risk behaviour, people would stop doing it.
 

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Yeah, I know the effects, not sure what the damage that we have to save for is.
Sags is suggesting saving billions of dollars to pay for future things, I don't see why.

Extended growing seasons in Canada, maybe a bit more irrigation, don't live in low lying areas.


Not really much to save for. I'd say make sure we have good infrastructure across the country.
 

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Mr. Matt forgot about the fires in BC, Fort McMurray and other forested areas. He forgot about all the flooding in different areas of Canada.

We are past pretending that climate change doesn't exist or cause financial damage and are already paying the rising costs.

Pretending otherwise is short sighted wishful thinking.
 

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Any predictions on the inflation rate being reported tomorrow?

The last reading was 5.1% and my prediction for this one is 5.5%
Your guess seems reasonable. It will be drastically understated as usual.

Gas costs alone are sending my personal inflation rate over 5%, and I don't even drive a lot -- just about 15K per year. Add in food and everything else, I'm probably paying close to 10% more than a year ago. All while trying to save up for a house at the same time, and it just feels impossible to keep up, let alone make any progress.
 
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