The S&P 500 is down 19% in 2022, but stocks still don’t look cheap to Charlie Munger, Warren Buffett’s billionaire partner in Berkshire Hathaway.
“In my entire adult life, I never hoarded cash waiting for better terms,” Munger said in an interview in late 2022. “I just invested in the best thing I could find.”
However, he acknowledged that Berkshire Hathaway has billions of dollars in cash. The reason is not that Buffett and Munger think they can wait for stocks to get even cheaper, the gamble known as “timing the market.”
Instead, Munger bluntly said that Berkshire isn’t buying anything “because there’s nothing we can bear to buy.”
It’s an incredible statement. Even with a stock market downturn that would presumably result in dozens or hundreds of shares trading for sale, at bargain prices, the world’s most famous value investors aren’t remotely tempted to take the plunge.
Berkshire Hathaway, and all the other big names in finance, are somewhat limited in what they can do. By law, major financial institutions and billionaire investors cannot buy more than 5% of a company without filing a 13-D beneficial ownership filing with the Securities and Exchange Commission and all the headaches that come with it.
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This essentially cuts Buffett out of the world of micro-cap investing, unless Berkshire Hathaway decides to jump through those regulatory hurdles. And even if the company decided to do it and discovered a 10 times greater opportunity, Berkshire Hathaway would hardly notice the advantage. If a $2 million stake turned into $20 million, that wouldn’t move the needle for a company that rakes in hundreds of millions of dollars in dividends every year from its Coca-Cola stake alone.
But for ordinary investors, it’s a different story. The world of start-up investing, legally closed to regular investors for decades, now it is open to the masses.
pure impulse is a startup experiencing significant growth in a mediocre market. With revenue growth of nearly 100% from 2020 to 2021, the startup has raised nearly $3 million from retail investors.
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This article Billionaire Charlie Munger Reveals Why Berkshire Hathaway Has $88 Billion In Cash originally appeared on benzinga.com
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