 Good day, fellow investors. One of the most important investing topics, but so under discussed, is inflation. It is something that makes part of our lives, but it can take advantage of us or we can take advantage of it. I recently received very interesting comments on two different videos, Sven, when you say 4% return, do you mean real returns or nominal returns or second comment? Is that before inflation or after inflation? And now the fact is, I don't know, because nobody knows what will happen to inflation in the next 10, 20, 30 years. The only thing we can do as value investors, as margin of safety investors, is position ourselves in a way that whatever happens with inflation, if there is big inflation, we take advantage of it. If there is small inflation or deflation, it doesn't affect us that much. And that's what we have to think about. So let's see how inflation affects our portfolio, our investments, our financial lives and then how to take advantage of it. So inflation is something that slowly but surely chips off the value of your currency. So an item according to normal statistics inflation that is now $1 in 1930 was just 4 cents. And that's just from the government reported inflation. It's even less if we take into account shadow inflation, etc. But this is over more than a century, not really meaningful for you. However, if we look from 1978 over 40 years, which is an investment horizon most of us have, then the cumulative rate of inflation is 74%. So $1 item was 26 cents in 1978. In this case is US inflation, we will later check UK inflation. 20 years still very, very significant, 45.1%. So what costs now $1? It used to cost 65 cents 20 years ago. And this is just the average inflation. Some products go down in price, some products really go up in price. So you have to see, okay, over 20 years where there is a lot of investments, cheap labor, when there is no constraint in production, those prices will go lower because of technology. There where there are constraints, what we used to call mode in business, prices might go up, up, up and up. So there is a big divergence when it comes to such investments. Therefore it is extremely important to keep in mind inflation while investing, to be protected against it and perhaps even take advantage of it. The best way to take advantage of inflation is perhaps a 30 year fixed rate mortgage on your home where you live in. So interest rates have been constantly declining and now are still close to historical lows. In this case in the United States, let me show you the Netherlands. In the Netherlands, you practically have free money, 30 year fixed mortgage rate in euros 2.5%. This is ridiculously low and this low interest rate environment has pushed up home prices. So you have to be careful and you have to be creative when you are buying something. But still, it is a great hedge against inflation where I plan to move the interest rates are a little bit higher in Slovenia, about 5%, combined 3%. So I'll have to do some calculations and see how that works out over time. And whether I will take a mortgage partly or fully, we will see. The positive of a mortgage is, okay, 2% inflation, 3% and every central bank, every monetary policy says we want inflation at 2% to 4%. That's their target. We're going to print money to keep inflation there because those that are in debt, governments, people, they take advantage of inflation because what you have to pay back is worth less. 2%, 4%, nobody feels it's stable inflation. So you have to think, okay, how can I take advantage of that? A mortgage, you start paying, you pay always the same rate, but the inflation should make it on a real term, always less, less, less and less. 28 years from now, you will be happy that you took that mortgage to buy that home that you wanted or something like that. However, completely different story, how to buy real estate today, you have to invest a lot of time to do that. But the mortgage is one example. Similarly, on the stock market, also great example here, the total return, the price return from the SAP 500 in this case from Schiller's data was 4.5%. When we add the dividends, that is 9.1%. So most returns come from dividends, historically dividends have been much higher. Then we had average inflation 2.1%, don't know whether that data is correct, but the total real return adjusted for inflation was 7%. So investing in businesses gives you an advantage over inflation because good businesses will be able to increase the price, will be able to transfer the input costs increases to their customers. So buying good businesses again, with a mode, with everything will allow you to take advantage of inflation even in the business environment. Just to note on bonds, if you take long term bonds, that's mostly speculation because then you speculate that interest rates will go down, the value of bonds will go up. However, you never know what will happen to inflation and that is what makes bonds risky in this environment. When as we see in the Buffett letters, bonds yielded 10%, 15%, Buffett was buying bonds over 10, 12, 15, 12 to 15 years because he was sure the interest rates would go down eventually and he would make a great return. Now that yields are very low, it's really betting on what the Fed would do, on what inflation will be. So it's very, very risky from a historical perspective. One example of a business that is protected against inflation and that is why airports are usually very, very expensive. With Yaokai I discussed Beijing Capital Airport in a video, so check that out, it will be in the link below. And in that video, you discuss an airport that can increase prices, increase the prices of the rents. As prices go up, they get a fee on every sale in an airport, as there is more traffic, everything goes up. So they are protected against inflation and they have a mode. And that is why they are usually more expensive than other non-normal businesses. But just to give you an example of, okay, this is a business that protects me against inflation. So this is historical inflation over the last 20, 25 years, it was really low. This is in the UK, just one time above 6%, but usually around 2, 3%. However, over the last 50 years, it would spike, it would go up, it would go down and that is where you can take advantage of it. Even if we have just two years of inflation of 8%, imagine the benefit you get on your mortgage, on your investments, etc. So it is important to be protected against inflation. I'm invested in commodities, natural gas because I see them in a positive economic environment. And that is exactly what Buffett was looking with his investment criteria when we discussed his 1976 letter. He's looking for positive economic environments because in such an environment there will be inflation and you have to take advantage of that. So thank you for watching. I hope I have given you an idea of, okay, this is inflation. How can I take advantage and always just keep in mind a little bit, okay, what will happen with inflation over the long term and then position your portfolio with that in mind. It will give you a huge tailwind while the risks aren't that big. Even if some talk about inflation, deflation, yes, deflation might be here, might be there, but you have to always differentiate between the average, somewhere there will be huge deflation, somewhere there will be and is huge inflation. Just look at real estate. Or stock market and assets. So always forget about statistics, try to position yourself so that you are protected. Check my webpage. I will be sending a weekly newsletter with an overview of the content that we are producing, so that might give you, okay, this is interesting. This is not interesting. So please subscribe to the newsletter. Also, research reports will be going through that newsletter. So please check that out. Subscribe on my webpage. Again, the link will be in the description below. Thank you and I'll see you in the next video.