The video is quite short and enjoyable, but if you can't watch it here's the quick take:
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Big companies are raising prices way above the rise of cost in labor and materials. This is proven by the increase net margin of big companies.
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Big companies benefitted from the Fed's bond and liquidity policies. They are able to borrow money for dirt cheap while small companies cannot.
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But shouldn't competition eventually drive down pricing? The hidden problem is that there's too much consolidation and near-monopolies in our industries. Big companies feel confident that they can raise prices because consumers don't have a lot of places to go.
So if these are true, we might want to consider investing in companies that:
- Represents near-monopoly (or duopoly) market share.
- Can pass along costs easily to consumers. Have been reporting expanding net margins.
- Provides goods or service that will not see decrease in demand during pandemic.
What are some companies that fit this description?
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