Subject: Re: The Berkshire Problem
The cash pile is somewhat of a problem, but it's not exactly an unusual one for Berkshire.

The cash pile is big in absolute terms, but Berkshire is a lot bigger than it once was.
Cash was 27% of investments per share at June 30.
10-year and 20 year averages are both about 29%, so the cash allocation is lower than usual.
It was 33-36% at year ends 2016-2028, and in the range 33-39% at year ends 2003-2006.

I think that cash is often best seen as merely the shortest end of the fixed income spectrum, not a magical thing by itself.
Cash + fixed income at June 30 made up 31% of investments at June 30.
That figure was as low as 35% at only one year end in recent memory, 2013. And two other years in the 38-39% zone.
Other than that it was 41% or more for every year end in the 20 years to 2018.
So again, the [cash+fixed] allocation is lower than usual.

The world has changed dramatically in the last year. Suddenly bonds and cash are providing a return that keeps up with inflation.
I don't think that the world has changed dramatically.
Interest rates are higher, but real interest rates aren't really. A little at the very short end, which won't last long.

I do agree that there is a problem for future capital allocation.
What's new is that the absolute number for the cash pile also matters now: there aren't a lot of elephants in the world.
It's extremely unlikely that Berkshire will ever have another single stock position like Apple which adds meaningfully to the company's value in so short a time.
For both of those reasons, new allocations of capital which are very large will almost certainly have moderate, not great, returns.

Jim