2021: If stocks are in a bubble, then is cash the best investment?

BECKY QUICK: Moshi Levine writes in, he’s an American living in Israel. He says, if you deem stock prices to be overvalued or in a bubble, do you think it’s best to keep your money in cash while waiting for prices to come down to a fair price? Or would it be a better idea to invest this money in some way, while waiting until stock prices are fair again, and then sell the investment to buy the stocks?

WARREN BUFFETT: Well, Charlie and I have had that discussion on a lot of things there… We bought some stocks, we really don’t know that much about, but I’m not really comfortable doing that.

CHARLIE MUNGER: We used to shooting fish in a barrel, but that’s gotten harder.

WARREN BUFFETT: We’ve got probably 10 to 15% of our total assets in cash beyond what I would like to have just as a way of protecting the owners and the people that are our partners from ever having us ever getting a pickle. You know, we really run Berkshire and make sure that we don’t want to lose other people’s money who stick with us for years. We can’t help somebody who does and buys it today and sells it tomorrow. But we’ve got a real gene that pushes us in that direction, but we’ve got more than we… We’ve got probably 70 or 80 billion, something like that, maybe that we’d love to put the work, but that’s 10% of our assets, roughly. And we probably won’t get, we won’t get a chance to do it under these conditions, but conditions change very, very, very rapidly sometimes in markets.

And we do have people that would like to join us, but the market option they have is just, is too great for them. If they’re publicly traded, I mean, they basically can’t, they would have great difficulty, well, then making a deal with us because somebody else would come along with using other people’s money. It’s, we may be unhappy about the 70 billion, but we’re very happy about the other $700 billion, so it’s not like we should complain.