The Risk Warren Buffett Considers Worse Than Holding Cash
The Oracle of Omaha has offered many investing tips over the years. Some of them just need a bit of context.
Overview
Warren Buffett has never been shy about voicing his opinion on idle cash. As he explained in an op-ed written for the New York Times during 2008's subprime mortgage meltdown, "Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value." And he reiterated this stance not too long after that, saying, "The one thing I will tell you is the worst investment you can have is cash... cash is going to become worth less over time."
Except, the Oracle of Omaha wasn't taking his own advice when he stepped down as Berkshire Hathaway's (NYSE: BRKA)(NYSE: BRKB) CEO and chief stock-picker at the end of last year. By then, the company was sitting on a whopping $373.3 billion in uninvested cash -- roughly one-third of Berkshire Hathaway's total market cap. And under new CEO Greg Abel's leadership, this cash stash reached nearly $400 billion by the end of Q1. What gives?
Details
Buffett's warning just needs context.
Source
Originally published at www.fool.com.