The 3 Best Methods to Earn Money with Your Cash
Cash Is No Longer Trash
In 2023, the rules of the game changed, with constantly evolving rules that depend on whether you take advantage of them or not.
This is akin to the government incentivizing the use of renewable energy and you installing solar panels for -70% of the initial cost.
This is precisely what has happened with money. If you have money, they give you more. Specifically, between 3.5-5% depending on the region you live in.
This opens the door to very high returns with very low risk. In our case, cash today is covering 300% of what we are investing in protecting our assets with very OTM PUTs and CALLs.
Warren Buffet, for me and for many, one of the best investors in history, makes it very clear:
"Size caught up with us, though increased competition for acquisitions was also a factor"
"For a while, we had many candidates to evaluate. If I missed one, and I missed many, another would always come up. Those days are gone."
"There are only a handful of companies in this country capable of really moving the needle at Berkshire, and we and others have picked them over relentlessly. Some we can value; some we cannot. And, if we can, we need to have an attractive price."
We have been warning for a long time that the market is extremely overvalued. However, the market still has room to advance for a bit longer, as shown by the following chart with the Shiller PE. This behavior is typical of the end of a cycle.
Returning to Berkshire (Warren), this company leads by example, hence BERKSHIRE HATHAWAY repurchased $2.2 billion of its own shares in the fourth quarter and increased the year's buybacks to $9.2 billion.
According to Bloomberg, Buffett is observing a lack of attractive opportunities, and with an increase in Berkshire's share price, even repurchasing its own shares is less appealing.
Considering that much of their portfolio is in cash (like ours), this increases cash holdings. It makes sense when paying at these multiples.
With buybacks well below the levels reached during 2020-2021, Berkshire's cash, which continues to increase:
Reached a record $167.6 billion at the end of 2023, $10 billion more in the quarter and $39 billion more over the year.
The cash mountain was so large that just the interest income in 2023 would be about $7.5 billion, assuming the company earned a 5% interest on its average cash treasury of $150 billion over the year.
Today we want to show you the three best methods to invest your liquidity in a safe way while maximizing your return: