Home Forums Members Forum Warren Buffett Cash

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  • AvatarAphroditus
    Participant
    Post count: 31

    Howdy . . . hoping you guys can give me some advice. I recently had a financial advisor look through what I have and tell me I am too conservative, mainly because I moved a lot of profitable positions into cash after buying on the March dip. Of course, he is selling to me and wants to manage that money. But with our hero, Warren Buffett, holding tons of cash, I don’t feel like I’m doing anything wrong. But Warren Buffett is a smart guy; much of his seed money came from and continues to come from dividends, interest on his insurance float and of course his cash instruments are in treasuries. Should we keep dollars (or euros, pounds, etc) as our cash holdings? Or are there good, liquid treasuries like TIPS that we could keep cash in and get some kind of interest/dividend payment on the sidelines? Any thoughts, suggestions? Thank you!

    • This topic was modified 1 month, 1 week ago by AvatarAphroditus.
    Leslie HarvathLeslie Harvath
    Participant
    Post count: 250

    My first thought is to advise you to run screaming from this advisor. Well, screaming is optional.

    AvatarAphroditus
    Participant
    Post count: 31

    LOL! They do have a fiduciary and the numbers they gave me were conservative (though I know they are sales numbers). In normal times I would agree with him that this proportion of cash is not effective. But what to do with the cash when you have it so it’s not dead cash? “Dead cash” comment just means sitting without much interest/dividends. That’s why I’m interested in the treasuries/TIPs.

    Sean HymanSean Hyman
    Moderator
    Post count: 2761

    Yep, that’s a decision you’ll have to make. But financial advising in general looks after themselves first and you 2nd. Only you can make that judgment. But of course he’ll say you’re invested wrongly because he wants to be the solution. It pays him to do so. And he doesn’t earn anything on cash. So that doesn’t appeal to an advisor.

    When dealing with financial guys, you have to see how they benefit. With me, I don’t benefit more if you have a million dollars in LI picks or $5000. I don’t profit off of your buys/sells, etc. so that’s as pure of a relationship as it gets. But in the end, only you can decide.

    Sean HymanSean Hyman
    Moderator
    Post count: 2761

    Cash is dead is wrong thinking. If it were right, Warren Buffett wouldn’t have $128 billion in cash. And he’s got it in dollars.

    Cash = opportunity for future outsized returns. Without it, you don’t have those opportunities. Something I learned from watching Buffett.

    AvatarAphroditus
    Participant
    Post count: 31

    Ok, I think we are getting to the question I am trying to ask. Is it better to hold “dollar cash” vs. “cash instruments” and if so why? Thank you.

    Sean HymanSean Hyman
    Moderator
    Post count: 2761

    Hold in dollars and don’t turn into being a currency trader with your cash. And hold the cash in your brokerage account’s sweep money market account.

    Leslie HarvathLeslie Harvath
    Participant
    Post count: 250

    @aphroditus, my second thought is to consider how liquid you can actually make your holdings of cash. All my cash is tied to IRAs (Roth or Trad), so moving cash in and out of, say, a money market fund back to my brokerage acct to earn a few quid can’t happen–or can’t happen easily. Sean recently addressed TIP (just look on the Forum posts a few threads down), so that doesn’t look like a good option either. Personally, I want my cash at the ready to grab opportunities as they become available, which (as we saw with USO) doesn’t just come with the monthly newsletter. That liquidity is worth the trade off. 🙂

    Leslie HarvathLeslie Harvath
    Participant
    Post count: 250

    Oops, what Sean said! 😀

    Sean HymanSean Hyman
    Moderator
    Post count: 2761

    Here’s the conversations on TIP.

    TIP

    AvatarClarence Gilstad
    Participant
    Post count: 25

    Sean Buy good ear plugs with all the bad advise in the news and from advisers. People will be running at you screaming.

    Sean HymanSean Hyman
    Moderator
    Post count: 2761

    Clarence, yeah, the news media and analysts will never give buy/sell indications when really needed.

    As far as other people advising, I know God will connect those to me that get it. So I don’t worry about that. God has given me a very faithful crowd.

    Sean HymanSean Hyman
    Keymaster
    Post count: 3300

    Notice that Buffett has $147 billion in in cash now and is perfectly fine with that. Notice that he’s not trying to convert it to euros or bitcoin, etc. Notice, he doesn’t worry about dollar erosion because he knows that cash = outsized opportunities. Notice that everything that Buffett touches doesn’t always turn to gold and he has his rough patches, etc. But his system still causes him to prevail over time. Also, notice that people have always underestimated him at market topping periods and some see him as a “has been”. They’ve been mistaken, every time, so far.

    https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-q2-earnings-profits-soar-86-percent-1029483870#

    AvatarScott Pearcy
    Participant
    Post count: 296

    Right now, I am about 30% cash…trying to get up to 50% as I sell positions from “other newsletters” as they become profitable…..Need to have a stockpile of cash to take advantage of the bargains that will exist when the market correction occurs and the market stabilizes….

    DANNY ABARDANNY ABAR
    Participant
    Post count: 71

    Good morning, Aphroditus

    If your cash is making you crazy, and you just cannot go on living with your “Dead Cash” not at work for you …

    You might consider investing a “limited amount of cash” and “Buy” a few long expiration (18 – 24 month) “Puts” in SPY (S&P500), QQQ (NASDAQ) or IWM (Russel 2000).

    This will alleviate you “need” to use your “Dead Cash”, but still invest within the confines of Sean’s message as to where the market will continue to move.

    It would be interesting if Warren Buffett is Buying Long Expriy Puts in the broad market indices??

    Of course, I would wait to see if Sean confirms …

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