Buffett on Treasuries during crashes

Discussion of the Cash portion of the Permanent Portfolio

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Kriegsspiel
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Buffett on Treasuries during crashes

Post by Kriegsspiel » Mon Mar 16, 2020 8:17 am

”We have to run the place so that every check clears under any circumstances,” Buffett said. “And that’s why we own Treasury bills. We don’t own commercial paper. We don’t rely on bank lines or anything. When people get terrified, and they will occasionally, everything freezes, you know? And you’re going to have to stand on your own feet at a time like that. It won’t happen very often, but it’ll happen occasionally.”

Many investors think Buffett will deploy some of Berkshire’s $125 billion in attractive investments in the coming weeks if he follows his maxim of “being greedy when others are fearful.” Berkshire’s class A shares finished Friday at $289,000.

Other cash-rich companies take a little more risk with their cash and marketable securities holdings. Google parent Alphabet (GOOGL) had $119 billion of cash, equivalents, and marketable securities on Dec. 31, and $53 billion of that total consisted of government bonds. Apple (AAPL) had $207 billion of cash and marketable securities on Dec. 31 and about $28 billion of that amount was in Treasury securities. Most of the remainder was in corporate bonds and commercial paper.

Buffett has said he’s willing to forego some interest income for the security of T-Bills in order to have maximum liquidity. That may end up being a good move if the market turmoil intensifies. link
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. This too is meaningless. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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