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Since I'm not confident I'll be able to figure this out myself from the article, I'll ask you: how exactly are they keeping this "cash"? It is predominantly som
by sanderjd 5y ago
Since I'm not confident I'll be able to figure this out myself from the article, I'll ask you: how exactly are they keeping this "cash"? It is predominantly some kind of treasury security or something, presumably?
- danielmarkbruce 5y agoshort term treasuries - that's almost always the answer when a company says cash. Sometimes it's other things, with almost exactly the same characteristics.
- mornuup 5y agoIt's written plainly in the report: "Of this sum, $120 billion is held in U.S. Treasury bills, all maturing in less than a year." So, T-bills.
- rdtwo 5y agoThey’ve are paying 5-6% annually maybe more to keep them there. That tells you how much they value cash
- ksec 5y agoWhere did that 5-6% comes from?
- after_care 5y agoInflation rate minus T-bill interest.
- chii 5y agoon paper, 7% inflation minus the 1%-2% T-bill interest seems like they're losing 5% per year. But this fails because of one underlying assumption - that the cash losing value at inflation is an absolute truth. it's not. The reason is that inflation pushes cost of consumption, but the cash Berkshire is holding is not for consumption, but for investment. Investments could be expensive, or cheap, and holding on to cash _without the requirement that the cash be spent on consumption in the future_ means the cash is not hit hard by inflation figures like a household holding cash.
- ksec 5y agoThanks. Much better than what I could have explained but didn't bother to reply.