Warren Buffett, deer poop and postage

Postage and Inflation

Rocky finishes reading Warren Buffett’s annual letter, and remembers Buffett’s quote, “It’s only when the tide goes out that you learn who’s been swimming naked.”

Moments later, Rocky looks out his window to see melting snow and a half-dozen white-tailed deer. Rocky utters (with Buffett-esque solemnity,) “It’s only after the snow melts that you see all the deer poop on your lawn.”

Buffett’s letter makes interesting reading, and one paragraph catches Rocky’s eye: “The [likely consequence] of once-unthinkable dosages [of massive government action] is an onslaught of inflation.”

Rocky already owns some TIPS (Inflation-Protected Bonds), gold and other tangible assets. He wants something BIGGER, BETTER and TAX-FREE. Especially with savings accounts yielding a cool 0.0%.

Rocky drives to the post office and buys a massive speculative long position in “Forever” Postage Stamps. (The post office clerk must have thought that Rocky was laundering cash. But he was too polite to ask questions.)

Forever stamps are valid first-class postage regardless of the nominal price. Assuming that postage continues to keep pace (or exceed) inflation, this investment will compound tax-free (unlike the TIPS), and can be lawfully sold at premium to original cost.

If inflation really gets out of control, it’s likely the Post Office will cease issuance of the Forever stamps, the stamps will become priceless “collector’s items,” and Rocky will have scored a home run. Rocky’s stop-loss: becoming a junk mail distributor.