1995: Why does Berkshire hold so much cash?

AUDIENCE MEMBER: Good afternoon. My question is simply about the cash and cash equivalents that are shown on the balance sheet this year versus last year.

In my thinking, cash equivalents is always something good to have around in case of a big market drop, being able to make opportunistic buys, as I know you’ve referred to “Mr. Market” getting manic-depressive at times.

Is there something that is less than obvious here that I’m not seeing? Or is the position not there now, should that happen in the marketplace?

WARREN BUFFETT: Cash at Berkshire is a residual. I mean, we would like to have no cash at all times. We also don’t want to owe a lot of money at any time.

But we — if we have cash around, it’s simply because we haven’t found anything we like to do, and we hope — always hope —- to deploy it as soon as possible.

We never are thinking about whether the market’s going to go down or something of the sort, or whether we might buy something even cheaper. If we like something, we’ll buy it.

And when you see cash on our balance sheet of any size, that’s an acknowledgement by Charlie and me that we have not found anything, in size anyway, attractive at that point. It’s never a policy of ours to hold a lot of cash.