Veteran Investor Explains What Sitting On Cash Can Do!

Investing money is quite key to any business. There is a certain risk included as investing in the wrong areas might lead to huge loss but sitting on cash is equally difficult according to Samir Arora. He gave an example of Warren Buffett who lost millions due to his decision.

He claims that Oracle of Omaha has endured a loss of $60 billion for ignoring the US markets' current run and not investing in it. Now, Buffet needs the market to drop by 20% in order to breakeven at the very least. On his social media account, he gave a clear explanation.

He said, “WB (Buffett) is sitting on US$ 280 b of cash. Not sure exactly but let us say that before his recent Apple sale and BAC sale he was, big picture, sitting on USD 150 billion range cash for last 2 years +. In last 2 yrs, US market is up approx 50% (Sep 22 to Sep 24). He therefore lost 40% (after making 5% p.a. from investing in treasuries etc) on US$ 150 billion, ie. US$ 60 billion due to not investing in market.”

Explaining about the 2nd problem, he said, “2nd problem with sitting on part cash- What do you pray for every morning. That markets go down because u have some cash or that the markets go up because u have major investments in the market. Can get very confusing for both you and God.”

He added, “If some one is sitting on 20% cash (solely on the basis of valuation concerns), what are they signalling on the stocks that they own with 80% of the fund- that these stocks are not worth adding even 1% more per name to deploy the cash in hand. Does not sound very bullish even on the stocks owned.”