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Why The S&P 500 May Be A Great Inflation Hedge For Investors

Apr. 06, 2021 4:00 PM ETIVV, SPY, VOO2 Comments
Alessandro Lazzaro profile picture
Alessandro Lazzaro


  • After an unprecedented fiscal and monetary stimulus, many economists and investors have warned that inflation looms large.
  • In his 1983 and 1984 letters, Warren Buffett explains which businesses are inflation-winners, and which are inflation-losers.
  • Applying the Oracle’s principles to the current S&P 500, I argue that just owning an S&P 500 index fund may be a good hedge against inflation.

Il gonfiaggio
Photo by JLGutierrez/E+ via Getty Images

Inflation Is Coming

The first episode of the blockbuster series Games of Thrones titles: "Winter is coming". After seven seasons, eventually it comes.

The "inflation is coming" rhetoric reminds me a little bit of Games of

This article was written by

Alessandro Lazzaro profile picture
I am a Bocconi University, MS and Maastricht University, LLM graduate. I worked at PwC Luxembourg as a tax and accounting consultant for large global investment firms like JP Morgan, State Street, Schroders; I then founded my own start-up. I have been investing since 2011, when I started helping my family dealing with the crisis that hit Italy in that year and the consequent depression: I directly manage part of my family s equity portfolio and I advise on the remaining equity and real estate investments. I also make tactical cash allocations and I seldom cover fixed-income investments. I also advise close friends and other relatives on building a solid long-term portfolio, mostly in equities.

Analyst’s Disclosure: I am/we are long IVV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

Nice article. Thanks.
E.D. Hart profile picture
I dont think that Buffet would agree that the current SP500, as it is priced today, makes a good inflation hedge. The rising price pressures will collapse PE ratios to more moderate levels. That will more than make up for the rise in earnings. The PE of 22 could fall to a PE of 12-15.
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