A classic Warren Buffett quote.
In a sprawling response to a question about the company’s cash pile, Buffett hit on a few key ideas.
The first, serious but also light-hearted, is that he’s not hoarding cash and passing on opportunities so that his successor, Greg Abel, can look good.
The second, and most trenchant, is that in Buffett’s view the investment business is simply not one where things happen monotonically.
“The one problem with the investment business is that things don’t come along in an orderly fashion,” Buffett said. Buffett then walked through some simple math — he’s been trading for about 80 years, and with 200 trading days a year, there’s been 16,000 (by this math) chances for him to trade.
“It would be nice if every day you got four opportunities,” Buffett said. But that’s not how the investment world works.
Buffett noted Berkshire’s had the chance to spend $10 billion recently — presumably some sort of acquisition was discussed that the company declined to make — and said the company would’t be opposed to spending $100 billion if the right thing came along.
And while Buffett said he’d prefer Berkshire’s Treasury holdings to be closer to $50 billion instead of the $300 billion position it is today, that desire is not a reason to make an investment decision.
“But that just isn’t the way the business works,” Buffett said. “And we have made a lot of money by not wanting to be fully invested at all times.”
Lastly, Buffett added that for most passive investors, it’s “not improper” to make a few investments and sit with them for their whole life. As investment professionals, Buffett noted the folks at Berkshire do not have that luxury.
“We’ve made the decision to be in the business, so we think we can do a little better than that by behaving in a very irregular manner,” Buffett said.
As for when the next great deal might come around, Buffett said probably not tomorrow, but it’s “not unlikely” to happen in the next five years.
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