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Buffett, 94 With $350 Billion In Cash, Holds Court
Warren Buffett's still alive.
That was one takeaway from Berkshire's annual meeting, where a 94-yea
I’ve got a few cigar butt stocks he could invest in with his $350B. They’ll suddenly become blue chips, and we’ll all be happy.
Great piece
Monthly Letter tonight…..
Can’t wait. Got my Thai ginger tea bag ready to brew.
I like Warren. We can’t hold it against him that he is old. It is true, he won’t buy anything at the P/E ratios we see these days, and he has never been big on tech that he does not understand (which he readily admits is most of it). That means he hasn’t bought much lately, years actually, but he has always stayed true to his rather conservative philosophy. Fundamentals, name recognition, and bottom lines should count for something, and if you are going to buy and hold you must buy things when they are truly on sale. It just isn’t the way most people invest anymore.
I am guessing that Greg’s next move might be to short USD (maybe indirectly by buying companies based outside the USA).
Either one believes that a bigger pie benefits everyone over time, or one believes they just want a bigger slice right now.
Trump is being an idiot.
I think the $350 billion and the polite chiding on tariffs tells you all you need to know. As far as the pope meme…
Don’t tell Donnie. Donnie doesn’t know.
I’m going to suggest that there is a significant difference between Buffet’s framing and Gopnick’s. Gopnick merely suggests that a trade deficit is not evidence that the U.S. is being exploited. That is, it’s neutral. Buffet is suggesting that a trade deficit, to the extent it helps lift an impoverished nation out of poverty will improve our children’s overall safety and security. That is, it can be a positive.
It’s an idea that is out of fashion and China may be a compelling counter example, but I still believe it has value.
Thanks for the Gopnik quote. I giggled. The truth is if traditional financial theory is the guide there are two possibly conflicting rules at play. Currently, the $350 billion is invested as cash. Any alternative that when invested at the margin, could provide a larger stream of cash than that being currently earned, should be substituted for the cash. So much for genius. The alternative option for the fund manager is that the ultimate return can only be achieved if the current cash is invested at a risk-adjusted level of return higher than the current earnings rate on the fund. So, probably there is virtually nothing left for him to buy that will meet those criteria and that fact is one reason he is retiring. Charlie is gone and there is little left for him to buy that will “move the macro company needle.” There is however, much available that will beat his returns on that cash.
Not a Buffet watcher, but my general impression is that at a high level, he builds cash when valuations are high and risk-reward poor, then waits for opportunities to come to him. Does not have a fully invested mandate. And he’s known for some years of his impending retirement, planned for what situation to put successor in.
$350BN in presumably T-bills at 420 bp seems tactically reasonable right now. BRK market cap $1.1TR and I think P/B not that much above 1.0X, so “cash” around a third of total portfolio NAV – rest being about a third operating companies, and a third public company equity. Guessing that if you could calculate beta of total portfolio, might be around 0.5. And in severe stress periods, correlations go higher, so actual (realized) beta in a severe market downturn might be 0.7? Not actually that conservative.
“Not a Buffet watcher, but my general impression is that at a high level, he builds cash when valuations are high and risk-reward poor, then waits for opportunities to come to him.”
That.
#1 rule is not to lose money. Would actually prefer to have all money invested at all times, but will only buy good companies when they are cheap. Ideal situation is to hold all stocks long-term and only sell when even better opportunities become available..
Awww, shucks! Tariffs sucks.