Tom welcomes back, Jesse Felder, founder, editor, and publisher of The Felder Report, to discuss inflation and its impact on investments. Felder argues that American citizens consider inflation a major issue, despite the Federal Reserve’s efforts to contain it. He suggested the Fed might accept higher-than-targeted inflation levels in the future.

Felder touches upon bond markets as indicators of potential inflation trends and the possibility of another “lost decade” for stock and bond portfolios due to current valuations. Felder criticizes passive investing, citing negative annual returns over a 10-year period, and emphasizes individual investors’ attention to Warren Buffett’s investment philosophy, focusing on valuation sensitivity.

Buffett’s massive cash position in Berkshire Hathaway was discussed, with reasons for his disinterest in gold and cautious approach due to concerns over the fiscal situation. Jesse suggests individual investors pay heed to Buffett’s underlying investment strategy while acknowledging opportunities unavailable to Berkshire Hathaway.

Felder also highlights the potential for a steep market reversal following the stock market’s overexuberance post-Trump’s election and emphasized insider activity and buy-sell ratios as indicators of earnings and economic disappointments in the equity market. He encourages investors to be cautious given current extreme valuations.

Felder expresses his interest on oil and gas stocks due to the changing inflation environment and the new floor at $70 for oil prices. He believes that energy producers would benefit from a more stable foundation for their commodity, despite concerns about the Strategic Petroleum Reserve’s size and potential implications of inflation and peak oil production.

Time Stamp References:
0:00 – Introduction
0:37 – Inflation Been Fixed?
3:45 – Fed & Inflation Targets
8:16 – Bonds & Reality
11:38 – Tariffs & Tax Cuts
14:10 – A Lost Decade?
18:05 – Warren Buffet Position
28:14 – Risk Exposure & Gold
32:08 – Market Exuberance
36:50 – Avoiding Loss
38:30 – Valuing Sectors
40:00 – Energy & Tech
43:44 – SPR & U.S. Production
46:38 – Peak Energy & Inflation
49:00 – Equity Mkt. Concerns
50:12 – Wrap Up

Talking Points From This Episode

• American citizens perceive inflation as a significant problem, despite Federal Reserve’s attempts to control it.
• The Fed might accept higher-than-targeted inflation levels in the future.
• Buffett’s cash position and disinterest in gold, potential market reversal, and focus on oil and gas stocks are notable.

Guest Links:
Twitter: https://twitter.com/jessefelder
Website: https://thefelderreport.com/
Articles: https://thefelderreport.com/blog/

Jesse Felder is the Founder, Editor, and Publisher of The Felder Report. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Since moving to Bend, Oregon in 2000 and founding The Felder Report shortly thereafter his writing and research have been featured in major publications and websites like The Wall Street Journal, Barron’s, Yahoo!Finance, Business Insider, RealVision, Investing.com, and more. Jesse also hosts and produces the Superinvestors and the Art of Worldly Wisdom podcast.