Is making less return than inflation really capital preservation?
There are many different types of capital preservation: CDs, money market, US treasuries which all earn interest while being safe.
People who worry about inflation and not knowing about CD, money market, and US treasuries is taking a HUGE risk leaving their money in the stock market during this pandemic.
I suggest looking at Warren Buffet's cash position in Berkshire's portfolio in the May 5, 2020 article below: My own cash position is also in US treasuries. Warren Buffet is not too worried about inflation:
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Warren Buffett's $128 Billion Question, Answered
Did Buffett use the fastest bear market correction in history to put some of Berkshire Hathaway's cash hoard to work?
May 5, 2020 at 6:06AM
On Wall Street, there may not be a more revered investor than
Berkshire Hathaway (
NYSE:BRK.A)(
NYSE:BRK.B) CEO Warren Buffett. Since the 1950s,
Buffett has used his investing prowess to grow his net worth from $10,000 to almost $74 billion. Keep in mind that this figure doesn't account for the tens of billions the Oracle of Omaha has donated to charities over the years. He's also generated close to $400 billion in value for Berkshire Hathaway shareholders over the past five-plus decades.
Suffice it to say that when Buffett speaks, Wall Street listens – and over this past weekend he did a lot of speaking. That's because Saturday, May 2, 2020, marked the release of Berkshire's first-quarter operating results, as well as the company's annual shareholder meeting.
There were obviously
a lot of questions on the minds of investors heading into this meeting, such as how the coronavirus disease 2019 (COVID-19) would affect Buffett's roughly five dozen fully owned businesses. But one question stood head and shoulders above all else heading into this past weekend's earnings release and annual shareholder meeting: Did Buffett and his team put the company's near-record $128 billion cash hoard to work?
That question has finally been answered.
Berkshire Hathaway CEO Warren Buffett at his company's annual shareholder meeting.
Buffett's near-record cash pile has grown even larger
Following the release of Berkshire Hathaway's Q1 2020 report, we can see that the company's cash, cash equivalents, and short-term investment in U.S. Treasury Bills has (drum roll)...
grown to an all-time record $137.2 billion.
Putting aside Treasury-bond buying and selling activity, Berkshire's cash flows in the first quarter show that his company purchased $4.003 billion in equity securities and sold or redeemed $2.166 billion of equity securities. In other words, Berkshire
was a net buyer of equities in the first quarter, but only put a total of $1.837 billion to work despite the stock market face-planting 34% in a 33-calendar-day stretch. Considering that Berkshire's investment portfolio was worth over $190 billion, as of this past weekend, and the company has tens of billions in value based on the five dozen or so companies it fully owns, $1.837 billion in net purchases is a drop in the bucket for the fastest bear market correction in history.
What's more, while discussing Berkshire's operational performance and other matters prior to the question and answer session, Buffett posted a slide of Berkshire's investment activity for the month of April. In total, Berkshire purchased $426 million in equities while selling $6.509 billion in stock (
primarily airlines). This will, in all likelihood, increase Berkshire Hathaway's cash hoard even more.
