this is Warren Buffett the best investor the world has ever seen and this is the list of his top 10 Stock Holdings as of our last update on the 30th of June 20124 as we know we get these updates every 3 months thanks to a very handy SEC filing called the 13f but take a look at this this is also the top 10 Holdings of Warren Buffett's Burkshire Hathaway on the 31st of March 2024 and here's the list of companies back on the 31st of December 2023 it's worth noting that out of the 41 companies that make up the total bir hathway portfolio these top 10 stocks hold 90. 4 6% of the weight and as you can see he hasn't really been adding anything to this list over this year but why why is the world's best investor stopped dead in his tracks and interestingly turned into a massive seller of stocks more so than a buyer does he see some sort of stock market pain on the horizon so for those that don't know Warren Buffett that well as an investor he is the world's best value investor and that means he only buys stocks when he feels as though he's getting the shares at a fair value he's not the business of speculating that an overvalued stock like Nvidia might go higher he's more in the business of waiting for an economic event that sends the shares of high quality business down and then buying in at what he considers a fairer valuation so with this in mind the biggest Reason by far that Warren Buffett has been relatively sitting on the sidelines across the last few years is because of a lack of opportunities due to an expensive Market we only swing a pictures we like and U it's just that things aren't attractive and uh there's certain ways that can change and we'll see whether they do I mean take a look at the S&P 500 right now we're seeing practically all-time high after all-time high and the stock market has been on a massive Bull Run since late 2022 I mean the shil PE tells us a similar story up around 37 when historically it should be down between 18 and 20 just broadly the stock market is quite hot and that's an issue that hits value investors hard even going back to 2019 before the pandemic buff was struggling with finding great opportunities then saying quote in the years ahead we hope to move much of our excess liquidity into businesses that birkshire will permanently own the immediate prospects for that however are not good prices are skyh high for businesses possessing decent long-term prospects we continue nevertheless to hope for an elephant sized acquisition so even back then he was struggling and for someone like Buffett periods of Market overvaluation affect him a lot more than they do say you and me because of berkshire's size you know because Buffett is looking to invest 5 10 15 billion dollar at a time even maybe more this limits how many businesses he can take a stake in without earning more than 10% of the company the Threshold at which he's considered an Insider and a lot more regulatory requirements apply he addressed this in his most recent shareholder letter saying quote there remain only a handful of companies in this country capable of truly moving the needle at Berkshire and they have been endlessly picked over by us and by others some we can value some we can't and if we can they have to be attractively priced and outside the US there are essentially no candidates that are meaningful options for Capital deployment at Berkshire all in all we have no possibility of eye popping performance he puts it simply a little bit earlier in the letter saying quote size did Us in there have been times in my life that I've been a wash in so many opportunities that I could have invested everything by Nightfall and then there's other times when the year goes well not in the early days but now we haven't seen anything that makes sense that moves the needle so there is a genuine underlying reason why Buffett of recent times has been buying less and less big positions the market has been overvalued yes but also for Buffett the sample size to choose from has been very very small and that has led the Burkshire hathway cash power to balloon to a whopping $76. 98 billion so 50% cash 50% stocks and that's obviously excluding the wholly owned businesses that Burkshire also has but compare that to say 5 years ago back at the end of Q2 2019 bur's cash position sat at 122.
32 eight billion representing 63% invested and only 37% on the sidelines that cash pile really is growing to monstrous levels now you're sitting on 168 billion of cash which you told us today is now more than $182 billion his questions are one what is Buffett waiting for and two why not at least deploy some of it well I think that's pretty easy to answer I don't think anybody sitting at this table has any idea of how to use it effectively and therefore we don't use it now at 5. 4% but we wouldn't use it if it if it was at 1% don't tell um the Federal Reserve that so the number one reason for the accumulation of the cash pile is a lack of opportunities but there is another Factor at play right now which was what Warren was talking about at the end of that clip there and that's treasury bonds and surprisingly for treasury bonds this is actually where things get really interesting but before we talk through that I wanted to tell you about this week's video sponsor which is train Wells so a lot of you guys that know me know I'm a bit of a gym junkie I've been going with a friend of mine four times a week for the past 2 years or so now but recently my mate has just gone on a Europe trip which is great for him but it isn't so great for my accountability so long story short train well which is formerly co-pilot reached out and asked if they could help because they have an incredibly feature-rich training app that actually just helped solve my problem so after downloading the app it matched me with my trainer Andrew who is honestly one of the nicest guys I've ever met we had a 40-minute chat about my current workout plan my goals moving forward and then he went away he designed an entire exercise plan around my schedule he took into account what I wanted my workouts to look like and the goals I was working towards and now it's just all in the app the app prompts me when I'm scheduled for a workout it takes me through my workout exercise by exercise as I'm doing it so it's got demos there if I need them I track my various weights and notes in the app and if I ever get stuck or I need help I can literally just message Andrew and he responds in this messaging tab it's really quite good I personally like focusing on strength training I really like the regular strength sessions they really anchor my weekly routine it also just helps with my mental health generally just getting away from work during lunch times and getting my body moving so it's honestly been perfect for me and I'd encourage you guys to give it a try as well it's the world's most advanced training app and I'm not surprised it was ranked highest out of the best personal trainer apps of 2024 by Forbes so if you wanted to give it a try the first 100 people to sign up with my train World link will get 14 days free and $25 of their first month so definitely check out the link in the description box or the pin comment for more info and thanks to train for sponsoring this video but now back to Buffett and as Warren mentioned in that last clip Beyond a lack of opportunities at the current time US Treasury bonds are playing a big factor in his investing drought buying treasury bonds is simply the process where you loan your hard-earned dollars to the US government and then they give you a modest annual interest return for doing so now in investing there's a whole lot of assets you can sink your money into and as you can imagine they fall along a line of least risky to most risky the least risky of course is cash and then you have things like term deposits Market tracking ETFs real estate you know individual stocks and then things like crypto or a night at the Bellagio on the other end of the scale but one investment that is extremely close to the risk profile of cash is the US treasury bond and that's because the only way for the investment to fail is for the US government to default I. E not be able to pay their debts which is an incredibly unlikely scenario but US Treasury bonds do give the investor better returns than cash which actually sits there you know slowly losing its value thanks to inflation so what you end up getting is investors or even companies like birkshire hathway that have cash lying around keeping that money invested in short-term US Treasury bonds now here's the thing over the last few decades that really hasn't been a great investment because interest rates have just been so low you didn't get much interest on your government bonds back in say 2020 when interest rates would drop to nothing today however you can get substantially more bank for your buck by even holding very short-term us treasuries this is the chart for the 3-month treasury bond and at the current time the yield is around 42% now in effect what this means is that the opportunity cost of having a lot of cash on the sidelines is much lower you don't feel as bad with money on the sidelines you don't necessarily get that feeling that your money is just sitting there losing value because if you invested in treasury bonds well 4.
5% actually isn't that bad sure it's not the highest return you've ever seen but it's not too shabby right and this is exactly what's happening in the burshire portfolio have a look at this chart which plots the amount of US Treasury bonds burshire holds as a percentage of their total cash pile over time as you can see now the interest rates are higher and treasury bonds are paying better the amount of money they have in Treasury has risen and when you add the stock portfolio in there as well you can see that as Buffett has sold off stocks that money has gone right into those safer treasury bonds this was a point that was heavily emphasized during the coverage of the Burkshire hathway shareholder meeting earlier this year I guess you have to think of it as what would he put new money into that gets over that hurdle of 5% 5. 4% yeah you got to get more than 5% that you can earn in treasuries in a very safe environment now that 5. 5% return that Becky mentioned has cooled to more like 4.
