Aug 20 (Reuters) – Individual investors have been cutting
back on cash in portfolios, the exact reverse of what Warren
Buffett has been doing at Berkshire Hathaway.
Who do you think has got it right?
Cash at Berkshire Hathaway stood at just over $55
billion as of June 30, an all-time high and two and a half times
the level he’s in the past said he likes to keep on tap to meet
extraordinary claims at his insurance businesses. That’s also up
more than 50 percent from a year ago.
Buffett’s green pile is in sharp contrast to individual
investors, who’ve cut cash in portfolios to 15.8 percent, a
14-year low, according to the July asset allocation survey from
the American Association of Individual Investors.
To be sure, businesses and individuals hold cash for
different reasons, but Buffett has used Berkshire, in part, as
an investment vehicle through which we can interpret his views
on markets, or at least the prices of some assets in them.
Berkshire, of course, has some difficulties in putting cash
to work not faced by your average dentist or lawyer, in that it
tends to make very large investments and as such may need to be
more patient than smaller fry. So it is quite possible Berkshire
Hathaway is waiting for the right acquisition to come along.