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hello everyone welcome to just invest today in today's video we are talking about the howard marx interview that he did with william green is the recession coming in 2022 or maybe even 2023 because so many people are worried about the recession coming there's so many signs and in this video howard marx talks with william green and they talk about how to beat inflation so if you want to watch the whole interview i'm going to link it down below but he gave so many jewels and gems i'm gonna go through it in this video because man inflation is already at like what seven percent and it might get out of hand because who knows man i feel like the fed is not even telling us the truth about the real inflation in this market man and this can all cause a big recession in this video we're gonna talk about it but before we do can you please right now the first thing howard marks actually talks about is that he always gets the question is this like the 70s because during the 70s inflation was double what it is today which is actually crazy to think so he gets this question a lot right now you have to think about what happened and why inflation is higher he still believes that some of this is due to the supply chain issues and that will fix itself over time because remember what happened during the whole pandemic and everything got shut down and he gives an example of a thai yoda that has more than 30 000 parts and if you don't have a part what are you gonna do you just have to wait so there's gonna be limited supply and there's gonna be such a high demand because people still wanna toyota's on top of that you had a lot of people just getting money right so there was just a lot of money floating around in the market because the fed was giving a lot of leave people were scamming using all those ppp loans had all this money to splurge but there was no supply for that still things that some of this inflation is still transitory which is kind of a good sign on top of that that pandemic relief is kind of slowing down or it's non-existent anymore so he thinks it's gonna more stabilize as time goes but he still believes that there's gonna be high inflation so we still wanna be able to beat inflation so we wanna be able to use stocks real estate or even fix income to beat inflation because we know the fed is really not gonna do what it's supposed to do back in the 70s they didn't know how to fix inflation they were using price controls and all these other elaborate schemes to try to hinder inflation but it wasn't working and now we know how to do it we just have to raise interest rates but guess what do you think the fed will actually do that to like three to four to five percent can you imagine that what it would cause in the market the recession would be upon us if that actually happened so howard marks does talk about three ways so let's get to the first way fix income instruments so when you're talking about fixed income instruments he suggests that you have more in the floating rate instruments and less of the fixed income because when it comes to fixed income you can't really do much you don't have any wiggle room for a high interest rate environment but with the floating rate instrument you're able to actually raise your prices as rates go up to adjust to the environment which is amazing so he wants you to actually get into the more floating rate instruments than the fixed income instruments that have like a baseline as for all the people using fixed income instruments next we have real estate man and we know the real estate market is going crazy so if you bought in a healthy market like a multi-family home you're gonna be able to raise rents putting all that onto the customer so that's gonna be an amazing way to actually beat inflation but you still have to have real estate in a good market where people are actually willing to pay for those rent prices third we have stocks if you actually want to be in inflation with stocks you have to make sure that your stocks the businesses that you actually own are actually beating out inflation seven percent so that's how you have to look at businesses that actually generate free cash flow so are they beating out inflation with the free cash that the business is producing so we want higher than seven percent and that's a good thing in this environment because a lot of these businesses that we probably own right now are not producing cash and we don't know how much cash they're gonna produce in the future but if you still have hope on that company that your purchase that doesn't produce cash now it's okay because if they're gonna produce all that cash in the future then you're still gonna make a killing in the market but people are so skeptical you can peop you can see that people are selling out of so many companies that are not producing cash because this high inflation environment plus interest rates may be going up that's why a lot of people are selling these high-flying stocks that sometimes are not producing cash because they want more safety what comes with more safety is buying companies that you understand that have a strong competitive advantage that have really good management and you can buy at a solid price for basics man so that's it for this video guys please like it subscribe to my channel i'm always producing so much content man peace
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