Subject: Re: Dear Mr Buffett, and your letter next week.
At the current valuation of SPY do you still think it's appropriate for anyone to be 90 $ SPY, or would you suggest more diversification?

In view of the current SPY valuation and the fact that spy currently yields a bit above 1 % would this be the appropriate time for brk to issue a quarterly dividend to yield a bit below 1 $ to be an even more reasonable alternative to spy. Obviously, our current cash balance justifies this decision

Dear Mr. Vegas:

Thanks for your inquiry. Normally I don’t respond to individual questions, but I do have more time on my hands these days, so here goes:

1. Do what you want. Personally I feel better about Berkshire’s prospects than SPY in the event of a market bump, but as the kids say, “your mileage may vary.”

2. No dividend. If you want a dividend, sell a share or two. The effect is exactly the same on the stock remaining in your portfolio. If you get $1 in dividend, the share price is reduced by $1. The only difference is that you will pay taxes on the $1, and at your current rate, which is probably higher than the long term capital gains rate if you sell a share. If you do sell a share or two, you will have some cash and you will pay less in taxes.

Don’t misunderstand, I love the United States, and believe in taxation to fund essential services, and even some which are not so essential. That said, I also like to keep the shareholders money in the shareholders’ wallet with the smallest tax consequences possible. If you want more, sell a share. Perhaps two. That has, over time, not been a great strategy, but you are welcome to it if that’s your choice.

Cordially, and always hoping for elephants,

Uncle Warren