It is a mixed feeling to see how the Buffett era is really closing its chapter, and it is exciting to see how Abel will turn out to be. I saw the cash pile and how people always see how ridiculous it is to hold it during this time, but I think I remember somewhere I read that Berkshire is like a 1-800 number; they don't always call it, but it exists for a reason. And that cash pile is actually in T-Bills and keeps generating interest.
Hi Austin — Agreed! I completely understand how Berkshire's massive cash position makes some people nervous and they don't think it's particularly efficient, but it gives me tremendous peace of mind. (Especially, as you said, when it's actually earning something with interest rates higher now than most of the post-GFC period.) I kinda like knowing that Berkshire can go BIG if the right opportunity presents itself.
1. Ajit’s reference to guiding insurance underwriters to feel comfortable saying no. To help in-force this he pays them salaries, rather than performance bonuses that might incentivize them to write poor policies. That relates to us as investors managing other people’s money. It is too easy for us to feel we should be fully invested. Imagine being 30% in cash, because there are no acceptable investments. Both Warren and now Greg are comfortable sitting on cash.
2. In his interview with Becky, Warren noted that the market has moved from being speculative to gambling. Many investors seem to think that if something doubled in price, it will double again, like betting on a winning horse.
Thanks Arthur! I also loved Ajit's comments about the importance of saying no and how Berkshire's insurance compensation is built around that. And especially how that can make finding the right people to hire harder because it's so unnatural to sit around doing nothing. I know Ajit doesn't love the spotlight or doing a lot of interviews and Q&A's, but it's always great to hear from him.
That halftime break interview with Warren was so good. I'm really glad they found a way to work him into the meeting as much as they did.
It is a mixed feeling to see how the Buffett era is really closing its chapter, and it is exciting to see how Abel will turn out to be. I saw the cash pile and how people always see how ridiculous it is to hold it during this time, but I think I remember somewhere I read that Berkshire is like a 1-800 number; they don't always call it, but it exists for a reason. And that cash pile is actually in T-Bills and keeps generating interest.
Hi Austin — Agreed! I completely understand how Berkshire's massive cash position makes some people nervous and they don't think it's particularly efficient, but it gives me tremendous peace of mind. (Especially, as you said, when it's actually earning something with interest rates higher now than most of the post-GFC period.) I kinda like knowing that Berkshire can go BIG if the right opportunity presents itself.
Thanks, Kevin for another fine summary.
I have two takeaways for us as investors:
1. Ajit’s reference to guiding insurance underwriters to feel comfortable saying no. To help in-force this he pays them salaries, rather than performance bonuses that might incentivize them to write poor policies. That relates to us as investors managing other people’s money. It is too easy for us to feel we should be fully invested. Imagine being 30% in cash, because there are no acceptable investments. Both Warren and now Greg are comfortable sitting on cash.
2. In his interview with Becky, Warren noted that the market has moved from being speculative to gambling. Many investors seem to think that if something doubled in price, it will double again, like betting on a winning horse.
Keep at it!
Thanks Arthur! I also loved Ajit's comments about the importance of saying no and how Berkshire's insurance compensation is built around that. And especially how that can make finding the right people to hire harder because it's so unnatural to sit around doing nothing. I know Ajit doesn't love the spotlight or doing a lot of interviews and Q&A's, but it's always great to hear from him.
That halftime break interview with Warren was so good. I'm really glad they found a way to work him into the meeting as much as they did.