Subject: Re: Spy down another 4 percent,
Jim wrote:

Mr Buffett is smart, but not prescient. Remember that the extra-large cash pile was built before any of the latest chaos, and before the election. Though he may have foreseen some general weak spots here and there in the economy, it seems clear it was mostly valuation based.

I agree it's unlikely that Buffett foresaw the latest chaos when building the extra-large cash pile. After all, Berkshire's latest known sales of Apple shares were before the election. I do think, however, that Buffett might have been influenced by elevated geopolitical tensions in recent years, especially between the U.S. and China.

At the 2024 Annual Meeting, Buffett said the following about building the cash position:

"But I don’t mind at all, under current conditions, building the cash position.

I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive."

Taking his comments at face value, there were two main reasons for building the extra-large cash pile: (1) valuation, and (2) "the composition of what’s going on in the world." While reason (2) could mean any number of things, it would not surprise me if deteriorating geopolitical tensions with China played a role. After all, that's basically the reason he gave at the 2023 Annual Meeting for why he quickly exited TSMC in early 2023:

"Taiwan Semiconductor’s one of the best managed companies and important companies in the world. And I think you’ll be able to say the same thing five, or ten, or 20 years from now.

I don’t like its location. And I’ve reevaluated that. I mean, I don’t think it should be any place but Taiwan, although they will be, obviously, opening up chip capacity in this country.
...
But marvelous people and marvelous competitive position and everything, I’d rather find it in the United States.

I feel better about the capital that we’ve got deployed in Japan than Taiwan. I wish it weren’t so, but I think that’s the reality. And I’ve reevaluated that in the light of certain things that were going on."

Also, in recent years, Berkshire has sold most, if not all, of its stake in BYD.

So, in a way, I think Buffett was "prescient," at least to the extent the current chaos is a symptom of geopolitical tensions between the U.S. and China. Presumably, he did not foresee the way things would actually play out. But he seems to have been preparing for the elevated risk of negative events with respect to China. Coincidentally, that also seems to have prepared Berkshire for the latest chaos in the U.S.