It seems if you go back and look at the Berkshire Hathaway cash holdings that they always increase before a large drop in the stock market (2001, 2007, 2022 at least). Just take a look at this graph versus the S&P:

https://companiesmarketcap.com/berkshire-hathaway/cash-on-hand/#google_vignette

He knows how to "time the market", even though, publicly, he says it's impossible.

Has anyone ever tried to look at indicators (MAs, MACD, combination of things) that line up to the Berkshire cash draw downs (i.e. when they "jump back in")?

Bonfire97 said:

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It seems if you go back and look at the Berkshire Hathaway cash holdings that they always increase before a large drop in the stock market (2001, 2007, 2022 at least). Just take a look at this graph versus the S&P:

https://companiesmarketcap.com/berkshire-hathaway/cash-on-hand/#google_vignette

He knows how to "time the market", even though, publicly, he says it's impossible.

Has anyone ever tried to look at indicators (MAs, MACD, combination of things) that line up to the Berkshire cash draw downs (i.e. when they "jump back in")?

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He never tries to time the market. He is a 100% fundamentals investor.

He sells when he thinks a business is valued high/too high and buys businesses he thinks are undervalued. according to him they do zero macro economic analysis/timing.

Couple thoughts here!

1) WB has been piling cash for years. This isn't a recent phenomenon. He has been criticized for not deploying that cash and has defended it by saying it's hard to find whales to move the needle when Brk is the size it is (like the poster above me stated). Another phenomenon he spoke about recently is that whale hunting is way more public when you're looking at businesses worth $50b+. It's hard to find undervalued and attractively priced businesses of this size because they attract so much attention from everyone. Hard to find a diamond in the rough. I think Charlie's thought process of buying good companies at fair prices will help us here instead of old school warrens fair companies at good prices.

2) WB doesn't time the market, but it does get tough to deploy capital at these valuations I think is his mindset. Could people take that as a misconception that he's waiting for a crash? Maybe. I think he's just waiting on the fair process to come back like alluded above.

3) it's interesting, during the Covid crash there were companies taking financing anywhere they could find it (see Tillman Fertittas 15% loan), but WB was not active in this market like he was in 2008. Will be interesting if he dabbles in it again if/when there is a large pull back. I'm sure he will.

My opinion (which may not be worth much!) is not to equate WBs cash pile to him waiting on a correction, more so that he's still hunting for that company or companies that will move the Berkshire needle and that's just hard to do when you have to deploy so much capital.

Ditto everyone's comment on always building cash as well as not timing market, but prefers valuations he likes.

If you read Benjamin Graham's Intelligent Investor, he talks about the trade off between bonds / cash and equities. Benjamin Graham was WB's mentor.

My money market is at a 5.28% SEC Yield right now, which is pretty low risk. Can you guarantee that in many equities when CAPE Shiller is above 36?

This. It's a natural part of their plan to have the cash to take advantage of those values.

Today gonna be interesting in determining whether a real correction is in the cards or not.

aggiebrad16 said:

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Couple thoughts here!

1) WB has been piling cash for years. This isn't a recent phenomenon. He has been criticized for not deploying that cash and has defended it by saying it's hard to find whales to move the needle when Brk is the size it is (like the poster above me stated). Another phenomenon he spoke about recently is that whale hunting is way more public when you're looking at businesses worth $50b+. It's hard to find undervalued and attractively priced businesses of this size because they attract so much attention from everyone. Hard to find a diamond in the rough. I think Charlie's thought process of buying good companies at fair prices will help us here instead of old school warrens fair companies at good prices.

2) WB doesn't time the market, but it does get tough to deploy capital at these valuations I think is his mindset. Could people take that as a misconception that he's waiting for a crash? Maybe. I think he's just waiting on the fair process to come back like alluded above.

3) it's interesting, during the Covid crash there were companies taking financing anywhere they could find it (see Tillman Fertittas 15% loan), but WB was not active in this market like he was in 2008. Will be interesting if he dabbles in it again if/when there is a large pull back. I'm sure he will.

My opinion (which may not be worth much!) is not to equate WBs cash pile to him waiting on a correction, more so that he's still hunting for that company or companies that will move the Berkshire needle and that's just hard to do when you have to deploy so much capital.

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And he obviously wants to move the needle in a positive direction. He's always lived by the mantra to be fearful when others are greedy and greedy when others are fearful. I think he believes the market in general is overvalued and thus finding the right value deal is harder in that environment. It's a little bit of chicken and the egg and I don't think he's necessarily waiting on a correction, but the reality is that a correction would make the deals more attractive for his capital.

Boom. Agreed.

Just buy brk.b, or .a if you can. It's the best index etf.