American Express (AXP)

American Express platinum cards
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American Express demonstrated its pricing power quite recently as it raised the annual fee on its Platinum Card from $550 all the way to $695.

The company also stands to directly benefit in an inflationary environment.

American Express makes most of its money through discount fees — merchants are charged a percentage of every Amex card transaction. As the price of goods and services increases, the company gets to take a cut of larger bills.

In fact, business is already booming, as the company’s revenue jumped 25% year-over-year to $10.9 billion in Q3.

American Express is the third-largest holding at Berkshire Hathaway, only behind Apple and Bank of America. Owning 151.6 million shares of AXP, Berkshire’s stake is worth over $23 billion.

Berkshire also owns shares of American Express competitors Visa and Mastercard, although the positions are much smaller.

Yes, American Express trades at over $150 per share. But you can get a smaller piece of the company using a popular app that allows you to buy fractions of shares with as much money as you are willing to spend.

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Coca-Cola (KO)

Coke bottles
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Coca-Cola is a classic example of a so-called “recession-proof” business. Whether the economy is booming or struggling, a simple can of Coke is still affordable to most people.

The company’s entrenched market position also gives it some pricing power. Besides, Coca-Cola can always rely on a trick it’s used in the past: keeping its prices the same but subtly reducing its bottle size.

Factor in its iconic brand portfolio and the fact that its products are sold in more than 200 countries and territories, and it’s easy to see why Coca-Cola fits nicely in a long-term portfolio.

After all, the company went public more than 100 years ago. It has survived — and thrived — in many periods of high inflation.

Buffett has held Coca-Cola in his portfolio since the late ’80s. Today, Berkshire owns 400 million shares of the company, worth approximately $20.1 billion.

Apple (AAPL)

iPhone 13 Pro phones
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No one who spends $1,600 for a fully decked-out iPhone 13 Pro would call it a steal, but consumers love splurging on Apple products anyway.

Earlier this year, management revealed that the company’s active installed base of hardware has surpassed 1.65 billion devices, including over 1 billion iPhones.

While competitors offer cheaper devices, many consumers don’t want to live outside the Apple ecosystem. That means, as inflation spikes, Apple can pass higher costs to its global consumer base without worrying as much about a drop in sales volume.

Today, Apple is Buffett’s largest holding, representing more than 40% of Berkshire’s portfolio by market value.

One of the reasons behind that concentration is the sheer increase in the tech giant’s stock price. Over the past five years, Apple shares have surged 491%.

Remember, if you don’t want to pick individual tech stocks after the sector’s massive bull run, you can always build a diversified portfolio automatically just by using your “spare change.”

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A potential 'forever asset’

Combine harvester harvests ripe wheat. agriculture
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Warren Buffett once said that his favorite holding period is forever.

And there’s one asset — often used as a safe haven from inflation — that might actually stay in demand forever: farmland.

No matter how high or fast consumer prices climb, people still need to eat. And it just so happens that Buffett’s good friend Bill Gates is America’s largest private owner of farmland.

These days, new platforms allow you to invest in U.S. farmland by taking a stake in a farm or farms of your choice.

You’ll earn cash income from the leasing fees and crop sales. And of course, you’ll benefit from any long-term appreciation on top of that.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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