No. of Recommendations: 11
Like giving up on cash and holding an index fund which (yes) would have higher long run returns, but also remove the ability to write very big cheques reliably on short notice in case of elephant opportunities or nuclear explosion claims.
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If you're holding a reserve in case of nuclear explosion claims and such, you can't use that same money for elephant opportunities, obviously.
There is currently a lot of cash for both.
If they invest that money, there won't be money for either.
It's the same problem.
Consider the post suggesting we'd be better off if the lion's share of the cash pile had been put into the S&P ten years ago.
True, but that's a comment with hindsight.
The valuation level of the S&P 500 ten years ago was about the same as the valuation level in, say, late 1968 (based on smoothed trend real earning power).
The next roughly ten years had a return of -4.2%/year below inflation that time. Holders of the S&P were luckier this time.
Invested money is invested. It isn't available for immediate use, especially not at the scale that Berkshire operates.
Heck, if they wanted to sell $40bn in T-bills in one day it would probably move the market.
Jim
