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uh you look at every commodity price right new copper lumber you know make your list look at what's going on in energy even before the colonial uh you know pipeline issue um look at housing prices look at bitcoin right everything is inflating this morning with with big numbers surprisingly high numbers out even one expectations for a high number can we go to this question for a video question from one of our viewers here harry kane well uh hi my name is harry kane and my question is as we are get into an error full of the inflation risk so what's your suggestion for us to improve our portfolio to deal with this inflation risk thank you so much sure so i do agree i think there's going to be inflation i mean you don't think there's going to be there is inflation it's happening this way is that a debate between like business people who are experiencing rising prices and addressing it versus economists who are saying oh this is just temporary blips coming out of the pandemic i mean where do you come down on that yeah i think it's not temporary first of all it's hard to roll back wages once you roll them up i mean you go from 15 to 12.
you know it's it so i would say we have a new baseline in terms of wages sort of generally you look at every commodity price right new hot copper lumber you know make your list look at what's going on in energy even before the colonial uh you know pipeline issue um look at housing prices look at bitcoin right everything is inflating um and that's driven by we have kind of a once in a moment in history uh right you have people emerging from a pandemic with the animal spirits that come from being locked right right so that's dramatic you have you have uh all that hit you know the vaccine roll out actually in the us certainly it's been you know fantastic uh so you have a lot of people feeling you know being fully vaccinated going back to their lives and then you have the trump stimulus the biden stimulus infrastructure an extremely accommodative you know federal reserve and everything concentrated in a couple of quarters so that's the federal reserve too accommodative do you think i think they're gonna have to raise rates for sure and i think you know they adjusted their policy in my view just at the wrong time you know a preemptive policy toward inflation i think is a better approach particularly in a world where we have uh you know massive massive uh stimulus economic stimulants is it too much stimulus i mean the cigar is i think with race where they are it will have there's a very good risk of the economy over here that's why i think rates go up and really the answer to the question the uh your viewer asked is you want to own businesses that have pricing power and you want to own businesses where the value of the business is not going to change dramatically if rates go up and so you know the risk to markets is you know what's interesting is you if you build a discounted cash flow you know analysis of a company and the business generates no profits for a decade and then you know grows very rapidly thereafter you know huge percentage of value the business is in if you will the the residual value of the company you know in your little dcf calculation small changes in the discount rate you use have a very big effect on the value of that kind of a company and so that's where the kind of high-flying you know highly valued technology companies that are not generating much in the way of earnings today uh you know those are i would say the biggest risk uh with respect to rate or rates rising uh and you want to own businesses that can uh you know raise prices to make up for their incremental input costs whether that's labor or or lumber you
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