Executive Summary: Warren Buffett is holding records amount of cash. Meanwhile, households are holding near record LOW levels of cash and near record high levels of stocks.
Last week we learned Warren Buffett’s Berkshire Hathaway set another new record for the amount of cash and short-term investments (e.g. U.S. Treasurys) its holding. Specifically, Berkshire is holding over $128 BILLION of cash and short-term instruments. That’s a lot of dry powder!
The reason he’s holding so much cash is because he hasn’t been able to find attractively-valued investment opportunities. So, like any disciplined investor, he’s not chasing obscene valuations. Successful investors don’t get caught up in the emotions of manias and bubbles. Successful investors also don’t let fear prevent them from buying good assets when they’re priced right much like Mr. Buffett was doing in early-2009 when everyone else thought the world was ending.
Last week, I also happened to come across some charts from @SentimentTrader (Twitter) showing how households are currently invested. There is some really interesting data here that presents a stark contrast to Mr. Buffett’s approach right now. Before we continue, remember Mr. Buffett’s wise words, “Be fearful when others are greedy and greedy only when others are fearful.”
Continue reading “Warren Buffett versus U.S. Households… In Charts”