Cash Is Never Trash

When a crisis hits, investors will start to sell off their most leveraged positions first.

When that isn’t enough, they sell off the core holdings they thought they’d have forever.

And when that isn’t enough, anything that isn’t nailed down goes too.

The final stage of a market selloff is when assets that have been holding up relatively well such as gold also start to tank.

The key to coming out ahead? Lean against the markets. When stocks are soaring, raise cash. You’ll feel a lot better when the fear hits – since you’ll have less to lose.

That’s the approach that’s worked well for Berkshire Hathaway, which now holds over 30% of its investment portoflio in cash:

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Berkshire Hathaway now sits on its highest cash levels ever.

Markets haven’t liked the stock since Warren Buffett announced his retirement at the annual meeting. In the past 90 days, shares have dropped nearly 15% from all-time highs.

With a 30% cash position, however, Buffett and his successor Greg Abel, are in a position to buy up entire companies without having to issue debt.

Until they do, that cash, mostly invested in short-term Treasury bills, will earn over 4% per year, still higher than inflation.

And with market valuations well over the “Buffett indicator” for greed, measuring a stock market valued at 207.4% of GDP, a record high, the market is ripe for a strong pullback.

~ Addison

P.S. We see continued market volatility as part of President Trump’s Great Reset plan. And Trump may be willing to rattle markets again, following the rise of the TACO – Trump Always Chickens Out – mentality prevailing on Wall Street.

Stay tuned for more volatility – and make sure you have enough cash so you can sleep soundly through a big pullback – and have cash to put to work later on.

That doesn’t mean sell everything – a 30% cash position means Buffett is still 70% invested. But now’s now the time to be all-in. And you can even use put options to profit from a quick swing lower, as we’ll be doing in a trade for members of the Grey Swan Trading Fraternity later today.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

When a crisis hits, investors will start to sell off their most leveraged positions first.

When that isn’t enough, they sell off the core holdings they thought they’d have forever.

And when that isn’t enough, anything that isn’t nailed down goes too.

The final stage of a market selloff is when assets that have been holding up relatively well such as gold also start to tank.

The key to coming out ahead? Lean against the markets. When stocks are soaring, raise cash. You’ll feel a lot better when the fear hits – since you’ll have less to lose.

That’s the approach that’s worked well for Berkshire Hathaway, which now holds over 30% of its investment portoflio in cash:

Turn Your Images On

Berkshire Hathaway now sits on its highest cash levels ever.

Markets haven’t liked the stock since Warren Buffett announced his retirement at the annual meeting. In the past 90 days, shares have dropped nearly 15% from all-time highs.

With a 30% cash position, however, Buffett and his successor Greg Abel, are in a position to buy up entire companies without having to issue debt.

Until they do, that cash, mostly invested in short-term Treasury bills, will earn over 4% per year, still higher than inflation.

And with market valuations well over the “Buffett indicator” for greed, measuring a stock market valued at 207.4% of GDP, a record high, the market is ripe for a strong pullback.

~ Addison

Stay tuned for more volatility – and make sure you have enough cash so you can sleep soundly through a big pullback – and have cash to put to work later on.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

On the current trajectory, online and offline tribal warfare, with events that range from assassinations to riots to sabotage, is inevitable. Worse still, with both sides waging moral warfare (good versus evil), there is no middle ground, rendering compromise impossible.

To avoid this, the government could step in to crack down on illegal immigrants, serial criminality, and activist blue cells to slow the ramp in extrajudicial violence from the red tribe. This would reduce the chance we see a rapid escalation in tit for tat violence. However, to do this, it would need to designate many activist groups as terrorist entities and pursue them with the degree of vigor we saw with Islamic radicals after 9/11.

We’ve been watching private credit all year — the $3 trillion shadow banking machine that promises “nimble lending” but operates in the dark. Think of it as the modern heir to subprime mortgages: a system that works beautifully until it doesn’t.

According to Moody’s, U.S. commercial banks now hold $300 billion in loans to private credit firms, up from just $100 billion a decade ago. That’s more than 10% of total bank lending — and it means the “non-bank” lenders aren’t so non-bank after all.

When banks lend to private funds, which then lend to companies like First Brands, the risk just loops back into the same system regulators thought they’d insulated after 2008.

Hedge funds have gone all-in on semiconductor stocks.

We believe the emergence of a USD stablecoin carries the potential to be a transformative event in monetary history, one as consequential as the day the United States severed its link to gold and as powerful in shaping the world’s financial order as the moment it abandoned Bretton Woods.

This paper does not offer reassurance of the status quo. It confronts a reality that few seem to have yet recognized and even fewer truly understand. It describes the quiet emergence of a tool whose strategic potential remains largely unseen, even as it begins to reshape the foundations of global finance.

When banks lend to private funds, which then lend to companies like First Brands, the risk just loops back into the same system regulators thought they’d insulated after 2008.

Hedge funds have gone all-in on semiconductor stocks.