In classic form, Warren Buffett took to task those that doubt America yesterday:
“Whenever I hear people talk pessimistically about this country, I think they’re out of their mind”.
Mr. Buffett also noted that since 1982 the richest Americans have always been buyers rather than sellers:
“You don’t see any short sellers [in Forbes’ richest American list]…It has been 241 years since Thomas Jefferson wrote the Declaration of Independence. Being short America has been a loser’s game. I predict to you it will continue to be a loser’s game.”
While Buffett is clearly optimistic about America, the same may not be true about his near-term outlook for stock prices (which Mr. Buffett rarely discusses). Consider the following chart, which suggests that Buffett’s Berkshire has never been more bearish on the equity markets.
As for a more relative perspective: when the financial crisis hit rock bottom (2Q-09) Berkshire had 16.5% of its investable assets in Cash while today that figure has doubled to 32.9%. Clearly Buffett is not finding value in the marketplace, which is the only thing to explain why he is leaving more than 30% of his company’s chips sitting on the sidelines. Akin to Klarman and many others holding a high percentage of their assets in cash, Buffett can only be called one thing with such a massive cash position: bearish!
As for what Buffett does when he is bullish, he starts buying stocks and happily tells everyone he is doing so. The last time he did so was in late 2008, with “Buy American. I Am” [bolds added]:
“THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.
So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds…Equities will almost certainly outperform cash over the next decade, probably by a substantial degree.”
In short, despite preaching that he is ‘bullish’ on America, Buffett is no longer buying America. Rather, Berkshire’s mounting cash pile strongly suggests that Mr. Buffett believes cash could outperform equities, at least over the near term.