GuruFocus founder Dr. Charlie Tian went live today to speak with members and answer any questions that came up during his presentation. He looked at some economic data points that have been added to the website that he believes can help users when considering investments in different industries.
Watch the full video here:
The presentation started off with Tian taking a look at some of the economic data points that users have access to. He used the chart below to highlight his point that the housing market has become very expensive recently. Due to the inflation that has occurred, investors should be careful when considering investments connected to the housing industry as prices have reached record levels.
He continued on to take a look at gold prices and offer his opinion on investing in gold. Tian explained that gold is approaching all-time high prices as seen in 1980 and 2011. When gold is trading at inflation-adjusted highs, it is likely not a good time to buy in his opinion. Instead, an investor should look to invest during times when gold is trading near an all-time low.
Tian’s presentation then moved on to a discussion regarding what industries he believes will do well during times of inflation. He started off by highlighting Warren Buffett (Trades, Portfolio)’s notion that a company must be able to increase prices easily and accommodate large dollar volume increases without investing additional capital to do well during an inflationary period. Based on these requirements, Tian believes both the software and insurance industries could offer good investment opportunities.
For example, a company like Microsoft Corp. (MSFT, Financial) can adjust its prices easily over time without worrying about losing customers. At the same time, it can increase its output to match consumer demand without needing to invest capital into additional infrastructure while an aerospace manufacturer would need additional machinery to produce more parts.
Before diving into questions, Tian reiterated the new operating data that has been added for several different industries. Alongside these new data points, definitions have been added in so that users can get an explanation of how these data points can be used to evaluate businesses and determine their competitiveness in their industries.
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