No. of Recommendations: 24
I have zero concern about Berkshire’s ability to deploy its excess cash at highly attractive prices. None. The only unknown is when—but the whether is certain. Berkshire can and will put that capital to work.
Remember: Berkshire only needs opportunities in a tiny sliver of the market—say, 0.5% of total market cap—to find extraordinary bargains. That’s all it takes.
And per Buffett himself, it’s actually easier than ever to buy billions of dollars’ worth of stock on the open market. He’s said he was pleasantly surprised by how effortlessly Berkshire could accumulate huge positions—OXY being the prime example. And when mega-caps stumble, the liquidity and high turnover make deploying tens of billions even simpler.
So what’s the rush? Berkshire is generating over $1 billion in operating earnings every single week while it waits. The businesses are producing some of the most reliable, diversified earnings on the planet right now.
Reading some of the commentary here, you’d think Berkshire will “wither away” until the cash pile is deployed, or that deep market pullbacks—events that happen like clockwork every decade—have somehow been abolished. I have no idea when the next one comes, but at ~25× forward earnings and a ~1% dividend yield, Buffett is perfectly happy taking a risk-free, guaranteed yield equal to the current market yield while he waits.
It’s simple. And entirely rational.
