Tuesday, May 8, 2012

Buffett hypocrisy: Investors shouldn't hold cash while his own company has record levels

Ahh, the Warren Buffett syndrome... whis is, do as I say, not as I do.  In the latest round of Berkshire Week, where investors get a chance to listen to the Oracle of Omaha during the annual shareholders meeting, the hypocrisy of the market appointed 'greatest investor' is on center stage.

In a response to questions on what people should be holding, or where they should invest, the Bershire Chairman said that holding cash for investors is risky over time, which intimates that you should only hold it during times of crisis, but be prepared to use it to buy tanglible things.  However, what Buffett failed to mention is, his own company, Berkshire Hathaway, is in fact holding cash, and at record levels.

As can be seen in the attached clip Warren Buffett, as part of his anti money tirade, both real (gold) and fiat, the Chairman of Berkshire is certainly not a fan of holding cash in any form. To wit: "cash is as risky an asset you can own over time." In other words, the opportunity cost of not owning something else with that cash is indicative of even more risk in the equities arena. So one wonders: is the fact that Buffett's firm now has a record amount of cash on its books more an example of senility or hypocrisy.... Or is all hell about to break loose as per Buffett's own words? We can't decide. - Zerohedge

Buffett's comments also come within days of his right hand man saying in an interview that gold is something for the Jews in Hitler's Germany, but not an investment for civilized people.

The entirety of the Berkshire model appears to now be tied intrinsically to government largesse, and the need for investors to keep throwing good money after bad in the manipulated stock markets.  Berkshire is about owning good productive companies, however, if people are no longer buying what they have to offer, then the Oracle of Omaha is the one left holding the bag.

And perhaps this is why Buffett is holding cash, while at the same time, expecting you the investor to spend yours on him and his products.


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