Buffett disciple Guy Spier has 2 ways to beat inflation — without gold or bitcoin

Published Sun, Nov 14 202110:19 PM ESTUpdated Mon, Nov 15 20212:05 PM EST

Investors looking to hedge against rising price pressures should not buy gold or bitcoin, according to Guy Spier, who started Aquamarine Capital after being inspired by legendary investor Warren Buffett 's investment philosophy. Instead, the two best ways to protect against inflation are putting money in stocks of companies that yield strong returns — or investing them into real estate, said the CEO of Aquamarine Capital during CNBC Pro Talks with Tanvir Gill. "My view is that the … best hedge against inflation is to own good businesses, that's really the best. If you're in good businesses that can float above inflation — and there are a number of them that can — then that really is the best protection," he said Wednesday. "A second best protection, if you don't trust the stock market, would be to own real estate," said Spier, who described the sector as a "wonderful way" to guard against inflation. Gold is often seen as an inflation hedge, though it has had a mixed record in the past. Some investors also suggest that bitcoin could rival gold as a store of value in the long term. Spier admitted it would be a difficult call if he had to choose between gold and bitcoin to combat rising prices. "It's tough. I think that I would probably hedge my bets on those two," he said. "I would want the appreciation of bitcoin and who knows where it goes, but I also like the physicality of gold and the sort of like, the ethereal nature of bitcoin would bother me." Bitcoin has seen wild swings in its price this year, and is up more than 120% year-to-date. Gold, on the other hand, is down 2.97% in the same period. Spier holds around $100 worth of bitcoin and similar currencies in a personal capacity, he said. To be clear, his views on gold and bitcoin were made in the context of protecting against inflation, and not as general investing advice. Crypto's future Beyond bitcoin's potential role as an inflationary hedge, Spier's view of cryptocurrency is that it is "utterly revolutionary" — but parts of the market are in a bubble. "It can be both. We don't have to choose whether it's one or the other," he said. Crypto "is going to change the world" — but it's "quite probable that at least parts of the crypto market are ginormous bubbles, utterly ginormous bubbles," he warned. Asked what he thought about Charlie Munger calling bitcoin "rat poison" in the past, Spier said the vice chairman of Berkshire Hathaway likely wanted friends and family to be cautious about investing in cryptocurrencies. Spier's investment philosophy is influenced by Buffett, chairman and CEO of Berkshire Hathaway. Spier and fellow investor Mohnish Pabrai famously paid $650,000 to have lunch with Buffett in 2018. Spier predicted that in 10 or 20 years' time, it will be clear that parts of the the crypto market aren't rat poison. Still, it is safer to wrongly assume that something is rat poison, he said. "To shut things out that could have been good for you, you don't lose much. But to allow something to come into your life, and it turns out it was not a good thing can be an extraordinarily expensive mistake," he added. — CNBC's Greg Iacurci and Eustance Huang contributed to this report.