Why are Buffett, plus Clark and Davies, at TPP in cash?
Do these market veterans know something that many investors don’t?
Is something in the air, and should you be concerned? Let’s explore.
At the end of Q4 Warren Buffett’s company Berkshire Hathaway was sitting on its largest cash reserve ever. The figure amounted to a whopping 334 billion dollars.
This figure has been creeping up for quite some time but was boosted further after he shaved off some of his holdings in both Apple and Bank of America.
Buffett is known for being patient, he is recognised as an investor who only makes moves when the odds over the longer term seem to be in his favour.
Therefore, the question many investors are asking is ‘What kind of opportunity is he waiting for’?
Meanwhile, a company we follow closely is TPP.
As well as their top-tier performance, their portfolio exposure and live performance are both very transparent on their investment platform.
Like Buffett, they also believe in the power of long-term growth in global equities and the impact of compounding those returns year on year. However, where they differ is they also tweak their portfolios and strategies more regularly to take advantage of market gyrations and volatility.
Guess what?
Just like Buffett, TPP is also very much under-exposed to the global stocks as I write this.
On the TPP platform which assists the retail investor market, they adopt 3 different approaches to building portfolios. One is tracker-based products (whole market and funds), one is what they term a ‘long or flat’ and the other is an ‘active equity long/short’ technique.
Currently (subject to change) a glance across their strategies also suggests they’re underexposed to global equities currently.
Their trackers are in a position to track. However, their two approaches that adapt to an ever-changing market climate, both currently have minimal long exposure. More importantly, looking at their trade logs, it’s been like this for a few months.
Therefore, right now on one hand we have a legend who some would call the world’s most patient and successful long-term investor holding record levels of cash. On the other hand, we have an investment platform that many shrewd investors are allocating capital to, and is tearing up the traditional world of wealth management both holding far more cash than normal.
As we explored further this is what they had to say:
Warren Buffett:
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett wrote. “That preference won’t change.”
Buffett noted that while the firm’s holdings in stocks fell last year, the value of its private holdings rose “and remains far greater than the value of the marketable portfolio.”
He continued: “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities—mostly American equities although many of these will have international operations of significance. Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”
Meanwhile, Lane Clark of TPP said the following:
“We concur with Warren on many counts. Over the longer term, global equities are an amazing wealth-growing tool. Warren and his approach have proved this time and time again. However, could a more modern approach to investing be adopted to boost those longer-term returns? In my humble opinion, definitely. This is why we built TPP. Investors are fed up with regularly underperforming market benchmarks, and we’re assisting them to reverse this trend. However, although we differ from Warren in his predominantly ‘buy and hold’ approach, we make semi-regular tweaks to our portfolios, and currently, those tweaks are witnessing many of our ‘long or flat’ strategies move into a flat/market neutral position.”
His fellow founder Ed Davies chimed in with the following:
“I live and breathe the markets. They’re my passion. Right now, I just can’t say with any certainty which direction they’ll move next, and hence why many of the TPP strategies are flat at the moment.”
So there you have it…..
The old, wise, and experienced voice, and the fresh new innovative voice. They’re all saying the same thing…
Be careful out there investors. There is a reason these companies consistently beat their benchmarks. They’re not wrong often.
Is something in the air? Investors globally will no doubt find out soon.
For more information on Berkshire Hathaway please visit: https://www.berkshirehathaway.com/
For more info on TPP please visit: https://www.tppglobal.io/
