Buffett's Cash Pile: Wait for a Market Crash or Prepare for a Successor?

Tiger_chat
02-25

In Buffett’s annual letter to shareholders on February 22, he wrote, "I am 94 years old, and soon Greg Abel will take over as CEO and write the annual letter." $Berkshire Hathaway(BRK.A)$ $Berkshire Hathaway(BRK.B)$

Aside from the succession, the most talked-about topic surrounding Berkshire recently has been its record cash pile. In 2024, Berkshire reduced its stock holdings by more than $134 billion, including two of Buffett's long-time favorites— $Apple(AAPL)$ (which he invested in starting in 2016) and $Bank of America(BAC)$ (which he has held since 2011). This has caused Berkshire's cash reserves to a record level since 2024.

With record cash pile, Buffett still emphasizes his preference on stocks.

Although Buffett did not provide detailed reasoning behind the cash position, he reiterated his preference for holding stocks rather than cash.

"Despite the voices in the market suggesting our current cash position is unusual, our funds will continue to be mainly invested in stocks," he said. "This preference will not change."

Looking at Berkshire's portfolio adjustments over the past year, Buffett has been actively seeking new opportunities to deploy the cash.

One of the most notable moves is his continued emphasis on the Japanese market. While he again stressed that the U.S. will remain Berkshire's primary investment market, he specifically mentioned that investing in Japan is a "small but important exception." In 2024, Berkshire significantly increased its holdings in Japan's five major trading companies.

What do you think Buffett plans to use the record cash pile for?

Some people believe that Buffett's record cash pile reflects extraordinary patience, waiting for a market downturn to buy more.

Others think this massive cash reserve is being set aside in preparation for the transition to his successor, with Buffett's passing potentially leading to some shareholder withdrawals from Berkshire.

There are also those who believe that Buffett may use this cash to increase his stake in Japan or other emerging markets.

What do you think Buffett plans to use the record cash pile for?

Do you think Buffett's choice of Japanese stocks is a good one?

Join our discussion in the topic or comment on this post to win tiger coins~

Is the Downturn a Good Time to Revisit Buffett's Wisdom?
Berkshire Hathaway grew a record cash pile even larger to $334 billion. Buffett has avoided many historic downturns throughout his long investing career. With the market showing no clear signs of bottoming out, is it time to revisit Buffett's investment philosophy? Which of his quotes have been the most eye-opening for you? And is Berkshire a good hedge in times like these?
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Comments

  • highhand
    02-26
    highhand
    he likes to donate to charity so maybe some portion of it will be gave away. another portion will be waiting for great opportunities. it doesn't have to be a correction, sometimes good companies fall for no reason. he can invest at anytime.
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