Good at film investors. Is Warren Buffett waiting for a stock market crash with 122 billion in cash? Or is he doing something else? In this video we'll discuss his approach to investing, which is extremely strong and powerful, and there is so much to learn from here. From patience, from diligence, from buying, only at the sweet spot. From even selling stocks at high valuations, he's a net seller of stocks now. He has been for the last three quarters. And then we will discuss his approach to investing and whether you should have the same preparation with your portfolio. Let's start. So, Berkshire's sketch pile has hit 122 billion. If you understand that 122 billion is 25% of Berkshire's market capitalization. So, if you look at the SAP 500 fully invested, Berkshire 75% invested. Plus, Warren Buffett can also always take on cheap debt to make acquisition. So, he's buying power, what you can't do on margin, or maybe you can. His buying power is in the range of 200 billion, which is 40% of his market cap. That is what Buffett can buy. He's just waiting for the right pitch. And he has been known, has been famous to wait for as long as it takes, because he knows the right pitch will come. Just not yet. And there have been many videos putting pressure on him. Pay dividends, do more buybacks. And that is the short term mindset. That is the short term mindset that usually doesn't do much good. But Buffett has the long term mindset and he has destroyed the market, thanks to his long term mindset. Let's see a little bit more about that mindset, why he has so much cash. And how did it work out in the past, when he was in a similar situation? Buffett describes his cash pile in his last letter to shareholders. So, 112 billion at year. And now we are at 122 billion. So, 20 billion is stashed for external calamities, insurance. So, 100 billion can be used as an investment. However, he always wants to be a financial fortress. He will miss many opportunities because a lot of stocks go up as we see constantly. But he will never get caught short of cash. And cash is the most powerful hedge when it comes to investing. If you have cash, you can simply deploy it when there are opportunities. For now, to buy complete businesses, Buffett says prices are sky high for businesses possessing decent long term prospects. His expectation of more stock purchases is not the market call. He doesn't buy stocks because he thinks the market will go up. Charlie and I have no idea. No idea as how stocks will behave next week or next year. I agree with that. I have no idea where stocks will go. I can be ready for everything and take advantage of good fundamental buys. Or what he says, we have to think about whether a portion of an attractive business is worth more than its market price. Now, here is why and how much cash Warren Buffett has. He made the same comments in his 1998 letter where he said, at year end, we have more than 15 billion in cash equivalents. That was a lot for 20 years ago. His pile increased 10X almost for now. But cash never makes him happy. It's better to have money burning a hole in Berkshire's pocket than resting comfortably in someone else's. When a really major business acquisition appears that would absorb his lift with assets, he will buy it. Currently, however, we see nothing on the horizon. This was 1998. And then if we look at Berkshire's cash pile, the same happened again in 2004-2008. There were a lot of years, four or five years, where his cash pile was about 40 billion. Similar to now, now we are at 120 billion. But he waits for that sweet spot purchase, that perfect pitch. What did he buy in 1999? Well, he deployed his cash to buy mid-american energy. So he bought 2.15 billion in cash and took over the 7 billion in debt. That was a large-scale acquisition for him. In 2009, what did he buy with the cash? He bets big on railroad. He bought Burlington, Northern for 26 billion. How did this end up? Well, let's look at the 2018 annual report. And we can see that railroads, 2018, 5.2 billion in profits, utilities and energy, 2.6 billion in profits. So if I sum that up, that 7.8 billion on the, what, 18-20 billion in profits over the year, that is 35-40% of total worksharers operating profits have come from the two acquisitions that he is always waiting for. So 40%-45% of operating earnings. The message here is simple. Always have cash and be ready to make acquisitions when the market gives you a price that is below the intrinsic value of the business. That's all what Buffett is doing. We cannot know whether there will be a crash or recession. Interest rates will go up and down. Nobody knows that. But when there is something trading at below market prices, you buy. We have an advantage Buffett needs purchases above 10 billion. To move the needle, we can buy smaller pieces of companies around the world. So we have an advantage when it comes to Buffett. Buffett will continue to simply wait there because that's how he maximizes his investment returns. 40% of operating earnings come from Burlington and Mid-American, both 10 and 20 years ago. Imagine what will be the operating earnings 20 years from now from the pile that he will deploy when the opportunity arises. And given the environment, there might be a recession, there might be a cash crunch, there might something be happening to allow Buffett to deploy that money. He says now he's targeting at 8-10% returns. So he can't find that for good businesses, but he is patient and he will wait for as long as it takes as he did over the past 50 years that delivered huge returns. Actually, when we look at what Buffett is doing now, he's actually selling stocks. Over the last three quarters, he has been a net seller of stocks. Berkshire has been a net seller of stocks. This is something we'll discuss in another video about long-term investing. Many think that long-term investing is just buy and forget. Well, no, I'll make a pyramid. You look at a lot of stocks, you buy some stocks, and then you focus just on the gems in your portfolio. And then over the long-term, you have just a few gems that you hold long-term. And that's exactly also what Buffett is doing. And but more about that in a video. So please subscribe and click that notification bell to get reminded each time there is a video out so that you don't miss on the crucial videos that might add the most value to your long-term investing returns. The conclusion is simple. Wait for something to be in your sweet spot, fundamental analysis, below intrinsic value, to really fit your long-term investing risk and reward scenario. Then always have cash, always be ready to buy more, always be ready to buy when the market gives you an opportunity. And then carefully deploy, get again, get more cash, beat through your salary, be it through dividends, put more cash in, and then wait for those sweet purchases. So you will beat the market. And that's also the message of this channel. We wait for that sweet spot purchases, we carefully balance our cash flows, and then we take advantage of the high market volatility. And number three, something we'll discuss in another video in the value investing school that we do here on YouTube, selling is also part of the investing game. Thank you for watching, looking forward to your comments, and I'll see you in the next video.