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Is Warren Buffett really betting on a crash? Is that the reason he's currently holding so much cash? That's what I want to talk to you about today. But of course, I just have to step aside for a moment. It 's not exactly a dream setting. So, I'm still in the Ötztal valley here in beautiful Tyrol, and many of you have commented on my videos this week, especially on Instagram.
Well, it all started over the weekend when Buffett's numbers came out, and you could see once again that he has even more cash than before. So now R. Buffett is sitting on $277 billion in cash. We'll talk about that in a moment. And he also sold a large stake in Apple again. Now, I just want to set the record straight for you.
First of all, he sold Apple shares. Yes, that wasn't a surprise, because he already said that on the May 1st weekend when we were live at the IBIR annual meeting. He said, "Yes, we will continue to sell Apple shares to reduce our stake." You have to understand, he's sitting on huge holdings of Apple stock; it's still his largest position, and above all, he's sitting on huge profits.
What many people don't seem to grasp is that Buffett wasn't the typical Byenthol investor that's often claimed. In his entire career, he did n't actually buy that many shares – only 260 in total. Of those 260 shares, he held 60% for less than two years. And I believe for more than ten years, he only held Z shares.
He only held Z shares, and sold the rest. So, Buffett – he 's still somewhat influenced by Graham, you know – buys undervalued stock but then sells when it reaches his perceived true value. That's why he sold them, and he explained it back in May. He believes that taxes on realized gains will rise in America, and that's why he prefers to sell now rather than later.
So, that's the first point about Apple. Now he's sitting on 277 billion in cash, and everyone's saying he's just waiting for the crash. And that's not correct in my opinion either. Now I have to say, Buffett and I don't talk on the phone very often. Wait a minute, I don't think ever. So, of course, I don't know this firsthand, but I have a slightly different perspective on things, and maybe that will help you understand why.
If you expect one of the best investors in the world to be waiting for a crash, or if you're convinced that he's waiting for a crash, well, then it would be stupid to invest. That's perfectly clear. But if you say, okay, there are completely different reasons why he has so much money, then maybe you should reconsider your own investment strategy.
Now let's look at this: he has 277 billion, but not in cash. He's invested this money in fixed-income bonds—five-year, two-year, three-year, five-year, and ten-year bonds. And he gets about 5% interest on them. He started doing this last year, and on average, he gets about 5% interest per year. Now, you have to understand that 5% interest isn't just 5% interest.
If interest rates in America fall, for example, then... This should also apply to government bonds, and it 's easy to assume that regardless of whether Trump returns to power or whether Trump comes to power or whatever, interest rates will fall. The government is practically standing by, ready to lower interest rates.
Then you not only get this interest, but you can also earn additional money through an increase in the value of the bonds. So, with lower interest rates and higher bond prices, you can earn even more money. This means you can calculate that with a bond investment in government bonds, you can currently earn 789% per annum, and that's a relatively good idea.
You say, "Hey, I have money, what do I do with it? I invest it." So why does n't he buy stocks now? Well, now you have to consider the following: for Buffett, it will naturally become increasingly difficult to invest this money due to the size of his company. You have to imagine that Buffett isn't like any other company, like Meta, Apple, or anything else where you say money comes in and then you invest in something new.
He really has the luxury problem of too much money and too few ideas, and he ca n't even invest this money in the market anymore because, quite simply, there aren't any companies he can take over. If he were to say, "Okay, I'm going to invest 100 billion in the stock market," can you imagine what would happen if he pumped 100 billion into the stock market?
How that would drive prices up? It's difficult, isn't it? Now, he does own companies, and that's one reason why I'm such a big Buffett fan and still a fan of the stock. I just have to briefly mention this, it's slipping my mind. And why am I such a big fan of Buffett stock? He also has many privately held investments.
That means he has many holdings that aren't listed on the stock exchange. There's NetChats, Fruit of the Loom, the railroad company, Geiko (the largest auto insurer), the insurance companies he owns, the energy suppliers he owns, and so on. Even with publicly traded companies, it's incredibly difficult to somehow manage 200 billion or 270 billion, so you simply have to come up with something new.
My personal opinion is just that, my opinion; it's not fact. The day will come when Birmingham Heaveway starts paying out dividends, yes, because they simply don't know what to do with the money anymore. They do buy back some shares now and then, but they would probably only do it much more massively if the prices were to fall a bit.
And of course, he also said, "As long as we don't find anything better," and perhaps government bonds are simply a better option than buying their own shares. Why do I believe Birmingham will eventually start paying dividends? Well, because what else are they going to do with the money? They wo n't do it as long as Buffett is still alive, because if it were a different company, some activist investor would come along and say, "Hey, start doing something!" Distributing dividends to shareholders is out of the question, but there's so much respect for Warren Buffett that it won't happen.
It's been around for a long time, and not so soon after his death. We see something similar with Apple. As long as Steve Jobs was alive, activist investors were n't involved. Steve Jobs died, and immediately the activist investors jumped into Apple and convinced the current CEO, Tim [ __ ], to buy back a lot of shares and, above all, to pay dividends.
And I believe that will happen with Birksshire Hathaway at some point. Whether it takes just a year or 10 years depends on how long Warren is still with us. For all I care, 10 or 20 years. I have no objection. So, I'm convinced that Buffett is n't waiting for the crash, that he's not saying, "I want to get rid of this money somehow," because it's simply because he can't.
There aren't that many companies out there where he can invest this money, not even on the stock market. Think about it: if he invests a billion somewhere, that's great, but if you 266, what good is that if you invest a billion somewhere? Compared to government bonds, you can pee in them. Did I just say pee?
God knows, you can pee in them. I meant to say you can pee in them and you can pump an incredible amount of money into them because it's just such a huge market. And I could also imagine that some people in Japan have bought again after the crash there. We'll see in a few weeks. The lesson here is: don't let yourself get worked up by people who say that just because someone has cash, they're waiting for a crash.
Because if you really looked into the person, if you really looked into the company, you would realize that he doesn't have cash, but that he has invested this money, and this investment in government bonds is a very smart investment in his position. So, that's number one. Number two: why don't many people understand this at all?
Well, because they do n't know any of these products, because they do n't know how interest rates work, how government bonds work, how volatility works. I'll post a video for you on Sunday. We have This week, sorry for the expression, we've been earning our butts off with volatility trades. I'm going to make a video about it, it's going to be amazing!
Now, my camera's gone again, I need to fix it. Okay, I'll upload a video for you on Sunday, but you really need to get involved with these things. And here's a little heads-up: on September 29th, we're hosting the only live event this year for non- clients in Germany. The only live event for non- clients this year is the Stock Market Strategy Day in Düsseldorf.
If you want, you can be there. I'll put the link in the video description below. Check it out, and I'd be happy if you came. I'll show you all the things you can do as a private individual. For example, last fall we started talking about Unline. We bought Unline together with our clients and are already very, very profitable.
We'll probably hold this position for a while longer. You just have to understand it; it's nothing complicated. You just have to know how it works. That's it for today. Just a little something to wrap things up. So, see you on Sunday, or maybe even tomorrow morning for "Sport with Jens," or on Saturday.
Definitely check it out! Thanks to all the new subscribers! We're already over 150,000! Our annual goal is 200,000. I know we can do it! So thanks for being a part of it, and I'll leave you with this prospect.
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