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.)

Mining stocks amplify everything. First Majestic went from losing money to 45% margins without building anything new. They just held the line on costs while silver did the heavy lifting.

That cuts both ways. If silver drops hard, margins compress just as fast. Same leverage, opposite direction.

The miners with the lowest costs and cleanest balance sheets will hold up best in a pullback and capture the most upside if the deficit keeps grinding.

Economists at Goldman Sachs said this morning they expect core inflation to finish the year around 2% even while GDP rises at a “surprisingly strong” 2.5% clip.

In our view, their inflation forecast is optimistic. Their GDP call? Modest.

The last time we pumped this much liquidity into the system — 2020 through 2022—the result was a manic asset bubble, runaway inflation, and an epic hangover at the Fed.

Goldman’s optimism has triggered a fresh round of bullish bets: cyclical stocks are rallying, “dispersion” in the S&P 500 is spiking, and the Fed is expected to cut interest rates twice before Jerome Powell gets kicked out of Washington at the end of his term on May 15.

Anecdotally, we’re hearing stories of warehouses full of GPUs sitting unused for lack of energy to power them. It’s a natural feature of the heavy capital investment in new machines. The grid has to catch up!

While Trump’s great reset rolls on in 2026, keep an eye on modular nuclear reactors and increased demand for uranium, natural gas and related resources.

These PM producers are literally printing the most ‘hard money’ that they ever have at these metals prices and record margins here at the midway point in Q4.

If there ever was a time for this sector to get overheated and frothy, this would be it… only that isn’t what we’ve seen playing out.

PM producers are still insanely profitable at even at current metals prices and should be far more valuable based on their margins, revenue generating potential, and their resources still in the ground.