Adam Patinkin

And instead that inflation was going to mean revert a lot lower back to normal. And that's essentially what's turned out to happen. Headline inflation is down from 9.1% at peak to 2.8%. Core inflation is down from 6.6% to 3.1%. Our thesis has really played out. And I think that we had two key insights at that time. One was, what was the cause of inflation?

And instead that inflation was going to mean revert a lot lower back to normal. And that's essentially what's turned out to happen. Headline inflation is down from 9.1% at peak to 2.8%. Core inflation is down from 6.6% to 3.1%. Our thesis has really played out. And I think that we had two key insights at that time. One was, what was the cause of inflation?

I think that there was a lot of worry that it was caused by monetary policy or fiscal expansion policy, but our conclusion was different. We thought that it was caused by a supply shock, that when COVID lockdowns happened, it caused a lot of capacity to come out of the market. You know, you might have 100 retail stores. You shut them all down during lockdowns.

I think that there was a lot of worry that it was caused by monetary policy or fiscal expansion policy, but our conclusion was different. We thought that it was caused by a supply shock, that when COVID lockdowns happened, it caused a lot of capacity to come out of the market. You know, you might have 100 retail stores. You shut them all down during lockdowns.

And when you go to reopen them, well, you don't reopen the 10 that were losing money. And the same thing happens across the supply chain, across manufacturing, across all these different industries. And so we ended up having this huge supply shock that caused prices to go up.

And when you go to reopen them, well, you don't reopen the 10 that were losing money. And the same thing happens across the supply chain, across manufacturing, across all these different industries. And so we ended up having this huge supply shock that caused prices to go up.

And as my grandfather, who bought a small farm in northwestern Illinois half a century ago, used to tell me, he would say, Adam, the best cure for high prices is high prices. And that's exactly what happened.

And as my grandfather, who bought a small farm in northwestern Illinois half a century ago, used to tell me, he would say, Adam, the best cure for high prices is high prices. And that's exactly what happened.

These high prices caused by the supply shock led to a significant supply response that caused in category after category after category, whether it was airfares or shipping expenses or whatever it was, prices came down. And that's the reason why inflation has moderated so much. It was a supply shock that market horses resolved.

These high prices caused by the supply shock led to a significant supply response that caused in category after category after category, whether it was airfares or shipping expenses or whatever it was, prices came down. And that's the reason why inflation has moderated so much. It was a supply shock that market horses resolved.

Hit me with it.

Hit me with it.

Yeah, so I think that cattle prices can stay high for a good amount of time, and I think it has to do with the biology of the animals. So it's really interesting when you look at chicken. You know, you can lay eggs, and you have a chicken that can – be a mama hen and start producing within 90 days. I mean, literally, you have the supply responses within a few months.

Yeah, so I think that cattle prices can stay high for a good amount of time, and I think it has to do with the biology of the animals. So it's really interesting when you look at chicken. You know, you can lay eggs, and you have a chicken that can – be a mama hen and start producing within 90 days. I mean, literally, you have the supply responses within a few months.

With pork, you're talking about a little bit longer, but, you know, a little longer gestation period, et cetera. But, you know, within a year, you can have a pretty significant supply response with pork. That's not the case for cattle. It's a 10-month gestation period.

With pork, you're talking about a little bit longer, but, you know, a little longer gestation period, et cetera. But, you know, within a year, you can have a pretty significant supply response with pork. That's not the case for cattle. It's a 10-month gestation period.

Then you got to get them to over a heifer to over a year, and then you drop another calf, and then it's another year before you slaughter the calf. or sort of the yearling. And so it can take three, four, five years before there's a supply recovery in beef. So it can happen much quicker in chicken and pork, but in beef, it takes a long time for a supply response to be solved.

Then you got to get them to over a heifer to over a year, and then you drop another calf, and then it's another year before you slaughter the calf. or sort of the yearling. And so it can take three, four, five years before there's a supply recovery in beef. So it can happen much quicker in chicken and pork, but in beef, it takes a long time for a supply response to be solved.

Yeah, I mean, maybe let me just use that question to kind of pivot back to the inflation conversation, because I know it's so important here. The things that you learn in life, including with sports, how to train, how to work hard, being on a team, all of those things, that really has an application in the investing world.

Yeah, I mean, maybe let me just use that question to kind of pivot back to the inflation conversation, because I know it's so important here. The things that you learn in life, including with sports, how to train, how to work hard, being on a team, all of those things, that really has an application in the investing world.