Berkshire Hathaway has reached a record-breaking amount of cash holdings.

Last Updated: 15. November 2023By

Millions of investors constantly keep an eye on the portfolio of the stock market veteran due to his success. Warren Buffett has held a large amount of cash for many years now. But what does the stock market guru do with a substantial $157 billion if he does not invest it in stocks? We discuss this, and why the cash mountain is constantly growing, in this article.

Revenues and dividends increase the cash position Warren Buffett is regarded as the world’s most successful value investor. He is known for his buy-and-hold strategy, which is also the simple reason for the high cash holdings. The Oracle of Omaha also sold smaller stock positions in the amount of $5 billion in the last quarter. This, as well as regular operating revenues and dividends from his stock investments, further increased the cash mountain.

Government bonds as a cash parking lot Recently, Buffett said that he invests in short-term US government bonds with maturities between three and six months. After that, the star investor could buy stocks again, larger companies as a whole, or buy back his own stocks when they are cheap. In the 80s, Warren Buffett, among other things, built a large stock position in Coca Cola. This investment was a stroke of genius. Today, the beverage company pays him more in dividends than he paid for it at the time.

Continuously increasing liquidity Those who believe that Buffett holds a high liquidity buffer are wrong. Berkshire Hathaway is currently valued at around $764 billion. The cash share is thus 20 percent. If Buffett were to invest all liquidity in US government bonds, the return on a five percent interest rate would be $7.85 billion. This gives his investment vehicle Berkshire Hathaway more money for new investments. Even if Warren Buffett’s purchases are not always correct, he still has a good eye for companies that generate and increase profits.

Berkshire Hathaway stock chart – ISIN: US0846707026


Technical outlook The share of Berkshire Hathaway counts to the long runners. In the past 10 years, the annual performance was almost 12 percent. The historical 200-day volatility (intensity of price fluctuation) is only 0.87 percent. The stock has been moving from the bottom left to the top right for many years.

Conclusion Just like Warren Buffett, every investor should have a plan when they invest in stocks. You don’t have to invest your liquidity buffer in government bonds, but you can also use the now higher-yielding call money accounts. In the long run, stocks remain the best way to build and manage wealth despite the higher interest rates. Those who trust the good eye of the veteran and his team in the future should be well served by the stocks of his investment vehicle Berkshire Hathaway.