Urbis Think Tank
Buffett affirms real estate among his preferred investments
My own preference … is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola (KO), IBM (IBM), and our own See’s Candy meet that double-barreled test.
The context of this comment is that investments in cash are inherently risky, as your purchasing power will be eaten away by inflation over time, even though the returns you receive might be stable. He also provides an excellent illustration of why investments such as gold are more risky than productive assets, as bubbles form in those types of asset prices, which always burst in the end.
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