The Oracle of Omaha, Warren Buffett is renowned for providing plenty of good advice in his Berkshire Hathaway Shareholder Letter, as well as during the five-hour long Berkshire Hathaway Annual Shareholders Meeting (AGM).
While I do not follow the meeting live due to the time zone difference, I would read the summaries published by newswires the next morning.
During this year's AGM on April 30, Buffett spoke at length about inflation, which is the primary concern of U.S. investors right now. In particular, he talked about how to attain the strongest protection against inflation.
Buffett said (and I quote from the CNBC article [here]):
“The best thing you can do is to be exceptionally good at something... [people] are going to give you some of what they produce in exchange for what you deliver.”
“Whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you.”
“The best investment by far is anything that develops yourself, and it’s not taxed at all.”
If Buffett isn't a legendary investor, I'm sure he will make an excellent life coach. Buffett understands that deep down, the best hedge, come economic hell or high water, is what lies between our ears.
Buffett is talking about our knowledge, skill set and abilities. These cannot be taken away from us, regardless of inflation, taxes, or automation for that matter. In this day and age, people are still willing to pay a premium to be served by "exceptionally good" craftmasters.
We can find many examples around us. Look no further than my second favourite topic - food.
We have a wide variety of pastries produced cheaply in industrial size ovens. Yet there are folks willing to fork out more to buy from an artisan baker.
And microbreweries will always occupy a niche market of its own, despite the proliferation of mass market brands like Tiger and Heineken.
Putting things in Singapore context, what Buffett meant is this:
If you sell bak chor mee (minced meat noodles), make sure you can cook the most delicious bak chor mee in Singapore. And you can always beat inflation by setting your own price tag without worry.
I can personally attest to Buffett's advice. Now I don't know how to bake bread, brew beer or cook a decent bak chor mee. But I do know at my workplace, I'm the first person my boss and colleagues turn to, if they want to consult on a specific technical subject. I have also carried out successful product demonstration to prospective clients, leading to contracts signed thereafter. I have delivered value for my employer.
This is only possible because I have spent effort sharpening my craft. And I have been duly rewarded for my labour via the inflation-plus-plus salary increment in the company.
Moreover, while I'm taxed on my income, the government cannot get a cent on the information stored in my head. If I have to start all over again in a new country, I am confident my knowledge, skill set and abilities will help me to survive adequately.
Granted, not all jobs are created equal. The fastest and highest rated delivery rider cannot expect a fantastic premium, given that competition is rife and the barrier of entry is low. But for most occupations, as you become a subject matter expert or take on a more vital role, your compensation should rise comfortably.
So take it from me that Buffett knows what he is saying when he uttered the words above.
You yourself, are the strongest protection against inflation.
While I do not follow the meeting live due to the time zone difference, I would read the summaries published by newswires the next morning.
During this year's AGM on April 30, Buffett spoke at length about inflation, which is the primary concern of U.S. investors right now. In particular, he talked about how to attain the strongest protection against inflation.
Buffett said (and I quote from the CNBC article [here]):
“The best thing you can do is to be exceptionally good at something... [people] are going to give you some of what they produce in exchange for what you deliver.”
“Whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you.”
“The best investment by far is anything that develops yourself, and it’s not taxed at all.”
If Buffett isn't a legendary investor, I'm sure he will make an excellent life coach. Buffett understands that deep down, the best hedge, come economic hell or high water, is what lies between our ears.
Buffett is talking about our knowledge, skill set and abilities. These cannot be taken away from us, regardless of inflation, taxes, or automation for that matter. In this day and age, people are still willing to pay a premium to be served by "exceptionally good" craftmasters.
We can find many examples around us. Look no further than my second favourite topic - food.
We have a wide variety of pastries produced cheaply in industrial size ovens. Yet there are folks willing to fork out more to buy from an artisan baker.
And microbreweries will always occupy a niche market of its own, despite the proliferation of mass market brands like Tiger and Heineken.
Putting things in Singapore context, what Buffett meant is this:
If you sell bak chor mee (minced meat noodles), make sure you can cook the most delicious bak chor mee in Singapore. And you can always beat inflation by setting your own price tag without worry.
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| Can you cook the best bak chor mee in Singapore? (Photo credit: Unsplash) |
I can personally attest to Buffett's advice. Now I don't know how to bake bread, brew beer or cook a decent bak chor mee. But I do know at my workplace, I'm the first person my boss and colleagues turn to, if they want to consult on a specific technical subject. I have also carried out successful product demonstration to prospective clients, leading to contracts signed thereafter. I have delivered value for my employer.
This is only possible because I have spent effort sharpening my craft. And I have been duly rewarded for my labour via the inflation-plus-plus salary increment in the company.
Moreover, while I'm taxed on my income, the government cannot get a cent on the information stored in my head. If I have to start all over again in a new country, I am confident my knowledge, skill set and abilities will help me to survive adequately.
Granted, not all jobs are created equal. The fastest and highest rated delivery rider cannot expect a fantastic premium, given that competition is rife and the barrier of entry is low. But for most occupations, as you become a subject matter expert or take on a more vital role, your compensation should rise comfortably.
So take it from me that Buffett knows what he is saying when he uttered the words above.
You yourself, are the strongest protection against inflation.
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