I kept hearing pros on TV suggesting investing in companies that can increase price in this inflation environment.
On the other hand, I heard that some companies generated record profits, much more than what is necessary to cover the additional costs caused by inflation. Some products are the necessity such as grocery, gas, etc. people cannot live without and many are struggling to pay for.
The ability to increase price could stem from lack of competition or the fact that customers love the product a lot and they got deep pockets. The former is usually the case for grassroot products while the latter is for luxury goods. Is it a sin to take advantage of the situation of inflation just because they can? Is this against ESG principle – Environmental, Sustainability and Governance? In North America, most industries are highly concentrated and lack competition, perhaps it is very hard to find public traded companies truly follow ESG.
It feels like only an ideal to strike a good balance among shareholders, employees, customers, and suppliers. This balance is better for the long-term shareholder values. We need to protect the equilibrium of economic ecosystem. However, the stock market is never forgiving and quite short-sighted by measuring quarterly results. It is hard to execute long-term strategy if it takes time and might take a hit at the bottom line in the short term. Just like what happened to Meta. It is a hard and rock place Zuckerberg is in. Aging product forces him to innovate. However, this new territory of Metaverse is full of uncertainty and challenges.
OK. Back to reality. We have to work with what we got as an investor in this troublesome world.