<p>When Warren’s latest huge investment was in the news, I heard a statement that he has $40 billion “in cash” that he is waiting to invest. Just where does Warren keep this cash? In a giant vault somewhere? In $100,000 money market accounts in every bank in the country?</p>
<p>Seriously, when they speak of someone having that much “cash”, what form of liquid investment are they talking about?</p>
<p>A waterproof Fort Knox?</p>
<p>I’m not sure Buffet’s cash is being held in US dollars.</p>
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<p>If someone offered me forty billion <em>soggy</em> dollars, I’d still take it…!</p>
<p>Warren: I have room for some.</p>
<p>Funny you all should ask that, I am asking that myself - in these times, corporations and individuals take advantages of the fire sales - the sale of WaMu overnight is a prime example. When the law was repealed recently that restricted who could buy a utility, we all joked around the office that “now Warren Buffett could buy us if he wanted to”. So what did Warren do last week? Buy Constellation, a utility that had lost most of its value over the past year and would have suffered an Enron-like fate otherwise…he turned around the deal in less than 48 hours, you need a lot of liquidity to do that!</p>
<p>There are many banks that ensure money over the $100,000 FDIC limit. In Massachusetts there’s the Depositors Insurance Fund, for instance, which covers amounts over $100,000. My bank in MA is FDIC DIF. I’ve never heard of a DIF limit, but $40,000,000,000 may be pushing it! :eek:</p>
<p>Warren Buffett used to own the largest above-ground supply of silver in the world. I think that he had about 120 million ounces and later increased it to 140 million ounces. He stored it in England as he was afraid that the US Government would confiscate it in an emergency (as was done with Gold after the crash of 1929). There were rumors that Enron borrowed his silver and sold it on the market before Enron went bankrupt. There were also rumors that JP Morgan was the guarantor of the silver in the leasing transaction (you have to have a guarantor for metals leasing). Silver took off shortly after Enron declared bankruptcy.</p>
<p>Buffett eventually sold his silver at around breakeven and it more than doubled after that. Why did he sell?</p>
<p>Buffett’s a really interesting guy and there are lots of stories about him - some that he’s told. His annual reports are pretty entertaining and I highly recommend reading them - even if you never took finance.</p>
<p>There are many 100% safe financial instruments to do this. T-Bills, short term Fed notes, reverse repo’s, (collateralized with direct obligations of the federal government). These markets are so large and liquid that $40 billion dollars would not even cause a ripple.</p>
<p>That is an interesting question. I was also just going to say, “T-bills” but thought I would check the Berkshire Hathaway annual report to see if they explained what “cash and cash equivalents” meant. I couldn’t find any details. During this past year we learned that some investments that were traditionally considered cash equivalents were in fact not safe, like auction rate securities. We have seen companies take writedowns on cash! So Buffett, being the smart guy that he is, probably has his cash in Tbills. But I would love to hear his answer to that specific question.</p>
<p>You looked in the right place, but missed it.</p>
<p>Its in the footnotes and suggests that its T bills and money market type investments. Also high quality commercial paper, I’d guess. Look at last years annual report. </p>
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<p>(c) Cash and cash equivalents
Cash equivalents consist of funds invested in U.S. Treasury Bills, money market accounts and in other investments with
a maturity of three months or less when purchased. Cash and cash equivalents exclude amounts where availability is
restricted by loan agreements or other contractual provisions. Restricted amounts are included in other assets.</p>
<p>Thanks everyone!</p>
<p>He just said on CNBC that he keeps most of his personal cash in Treasury bonds, and that the only stock he personally holds other than Berkshire Hathaway is Wells-Fargo.</p>