haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
In the 70s WEB wrote many classic letters that gave his somewhat different take on how to beat inflation with equities. His choice was companies that could run with very little incremental investment, either in plant or current assets. He wanted high profit margin, high ROA businesses. It almost turned the "hard assets" idea on its head, as what he wanted was a company that was as close to being a pure cash generator as possible. He sometimes used the analogy of a tollgate. By this time in his career, he was no longer attracted to the classic hard assets such as mines, feeling that whatever cash the miner got from selling his product was more than used up in buying new equipment, and prospecting for more places to dig big expensive holes.The classic way to beat inflation is to own commodities (PCRIX type stuff, physical gold, etc.), hard assets (stuff like real estate, timber, factories that make stuff people want, etc.), and commodity producers.
I think he is right. Hard asset plays can be excellent speculations, but a company with a capital sparing business and good pricing power will grind out the money every time. As Brewer mentioned, timber as a pure tree farm operation fits this, except that demand for the product can be very volatile. Tree farmers are price takers, not price makers. Their main salvation is that if they are well capitalized they can cut way back on harverst and just let the trees grow. They generally have little in the way of fixed committment to labor, and almost no plant other than the tree farms. Planting, thinning, pest and weed control and harvesting are contracted out. They can even contract road maintenance, and the logger will build the roads too.
Some capital intensive businesses with very long lived assets can fit it too, as long as there is not a great need for maintenance capital.
Generally these businesses don't get real cheap, except when people are scared out of their wits. I wonder if shipping as in the bulkers that we have been following might fit well, as long as they can avoid bk in the troughs such as now. No real pricing power, but I guess the ones with financial breathing space can pretty cheaply mothball excess capacity. I guess because I don't really know.
Ha