WSJ Opinion: Why Big Companies Love Inflation


The video is quite short and enjoyable, but if you can't watch it here's the quick take:

  • 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.

  • Big companies benefitted from the Fed's bond and liquidity policies. They are able to borrow money for dirt cheap while small companies cannot.

  • 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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