Where Data Tells the Story
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On Friday, we wrote about the actual “Buffett Indicator,” a very simple measure of the stock market’s value relative to GDP.
But there’s another Buffett-related signal that investors are focused on: Berkshire Hathaway’s growing cash pile, which hit $382 billion in the third quarter on the back of its growing insurance profit.
While we wouldn’t presume to know what Buffett and his tight-knit investment team are thinking, it’s hard not to speculate on the obvious: that Berkshire’s top brass just don’t see compelling investments right now.
In theory, Berkshire Hathaway has a lot of options — investing in its swath of majority-owned businesses, like railroads and insurance, buying stocks for its portfolio, or even buying back Berkshire’s own shares. In practice, however, $382 billion is such an unfathomably large figure that the list of investments that would make a dent in it is very small. One option would be to make a major acquisition, funded by Berkshire’s cash haul that’s now worth more than a number of iconic American companies.
See the full article here.