The "Buy Stuff" Bell Is Ringing, Are You Listening?

November 23, 2009 1:46 PM EST

Today's upside action in stocks and commodities illustrates that the "buy stuff" trade is in full effect. While inflation is hard to find in the CPI and PPI, smart investors are looking at the Fed's record balance sheet, its easy money policy and the record U.S. deficits as a crystal ball into the future.

This crystal ball is pretty clear to read. It says in big bold letters "INFLATION"

Smart investors know that eventually inflation will destroy the value of the dollars they hold and they are doing the only prudent thing they can - buying real assets.

Some are buying gold (NYSE: GLD), some are buying stocks (NYSE: SPY), some are buying oil (NYSE: USO). Warren Buffett, who is possibly the smartest investor ever, bought Burlington Northern Santa Fe Corp. (NYSE: BNI). Burlington Northern will benefit from the rise in inflation, as it transports real goods and commodities. In addition, it is cheaper than other forms of goods transportation, which is a positive with oil jumping up again.

This comment from Buffett on the Burlington Northern purchase was the most telling to us, but got little main stream mention. "I'd be more worried holding cash... The one thing about those unprecedented after effects is they're going to be very bad for cash. I would much rather own working assets that have cash in a period that could become inflationary down the road."

If that is not a bell ringing then I don't know what is. The "buy stuff" trade is on, are you listenin?

Real-Time Market Moving News Two-Weeks FREE http://www.streetinsider.com/premium_content.php

Related Categories

Insiders' Blog
Trader Talk

Stocks Mentioned

Related Entities

• Warren Buffett

Comments

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?