I have massive respect for Mr. Buffett…
He’s one of the all-time greats. Nobody has reached a net worth of over $100 billion by being average.
So there’s that.
But I came across an article about how Mr. Buffett has been navigating the “new normal” of relatively higher interest rates.
I wish someone in his circle introduced him to the 18.6-year real estate cycle.
It’d help him avoid one of the biggest investment mistakes of this decade.
Waiting for a Crash
A recent Business Insider article said that at the end of September 2023, Berkshire Hathaway, Mr. Buffett’s investment empire, had over $157 billion in cash and other liquid assets.
The famed investor’s Berkshire Hathaway held an unprecedented $157 billion of cash, Treasury bills, and other liquid assets at the end of September – a nearly $50 billion increase in 12 months. The company’s cash pile grew in part because Buffett and his team sold $5 billion of stocks on a net basis last quarter; they’ve now offloaded a net $44 billion of stocks over the last four quarters combined.
They call it “dry powder” in the industry. Capital that is readily available when the right opportunity arrives.
And in Mr. Buffett’s world, this opportunity would need to be one for the record books.
He is a value investor… which means that for him to like a stock, it needs to trade at low valuation multiples, such as price-to-earnings.
Here’s the problem, though…
It’s unlikely that the market will crash anytime soon… and the economy is still strong.
Over the next two to three years, there’s growth ahead, not a crash.
Not Time to Bargain Hunt… Yet
The market is about to continue growing as the 18.6-year real estate cycle continues.
Stocks will likely perform well this year. (Though we could expect some volatility in the first quarter of this year, 2024. But I expect the year to finish strong once again.)
Why not buy them?
Why sit on a multibillion-dollar pile of cash instead of putting that money to work?
I don’t know who Mr. Buffett listens to at this point.
But they haven’t heard about the relationship between land, real estate, and other assets within the framework of the 18.6-year cycle that’s worked consistently for hundreds of years.
Yes, interest rates are high, and right now, investors get paid to wait like they haven’t for a long while.
But still… waiting doesn’t get you ahead of the game.
Timing the market with the help of the 18.6-year cycle does.
The wait is over. It’s time to act.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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