Thijs Knaap on BNR on the mystery of declining inflation

Published on: 28 February 2024

"One more thing." Thijs Knaap is reminded of this catchphrase from TV detective Columbo when he observes the declining inflation. The chief economist of APG made this statement on BNR, where he was a guest on the investment panel of the ‘BNR Zakendoen’ radio program. He also discussed the planned IPO of Reddit and the future of Warren Buffett's investment firm, Berkshire Hathaway.


In the program, Knaap wonders why inflation is currently decreasing. "According to most economists, central banks raise interest rates in case of inflation. This is followed by a recession or at least an increase in unemployment, leading to reduced spending and a decline in inflation. However, this time, unemployment has not risen, and there seems to be something missing between cause and effect, making it intriguing. Because if we don't know why inflation is decreasing, we also don't know if it will rise again soon. It could also be possible that we are not at the end of this story yet. I, for one, don't completely trust it."

Another topic raised by the investment panel is the planned IPO of the American social news site Reddit. "Previously, their only revenue model was displaying ads between posts. That still constitutes the main source of revenue, but they now also sell texts to Google to train AI algorithms. The weakness of Reddit is that it relies on volunteers who write the texts." The economist compares it to Startpagina, a Dutch site that was popular around the turn of the century. "When the owner sold the site to a publisher, the volunteers who kept the site running were upset. That something similar could happen with Reddit is not unthinkable, especially since a small uprising occurred among users in June when the site became less accessible. Buying a company that relies on volunteers who can stop at any moment is risky, and I wouldn't want it in my portfolio."

‘Oracle of Omaha’
The discussion also touched on the future of Warren Buffett's investment vehicle, Berkshire Hathaway. Buffett's companion Charlie Munger passed away three months ago at the age of 99, and Buffett himself is already 93. Knaap remarks, "Berkshire Hathaway's track record is incredibly good. Buffett has often beaten the market since the 1960s. You might think it's because of him, but it can also be argued that he has structured the company in a way that allows them to continue performing well for a long time." In a letter to shareholders, the 'Oracle of Omaha' did admit that it is becoming increasingly difficult to replicate past performance, Knaap continues in the program. "The main reason for that is that they have become so large. It is much easier for a small investor to enter unknown companies and become very wealthy."

Knaap also had the opportunity to highlight APG's recent investment in the Swedish steelmaker H2 Green Steel. "The steel sector generates a lot of CO2 emissions. At H2 Green Steel, they will produce steel using hydrogen produced by hydropower, without emitting CO2. Half of the production has already been sold, which is remarkable for this sector."

Listen to the entire broadcast here (in Dutch).