Did you know that Warren Buffett made over 99% of his wealth after the age of 50?

Compound interest and long-term investments are more powerful than quick gains, even in someone’s senior years.

In today’s edition, you’ll find:

• Berkshire Hathaway Has Raised Over $100 Billion This Year—Its Hoard Could Hit $300 Billion This Quarter: First, we’ll take a closer look at how Warren Buffett’s company has amassed such an incredible sum this year 💰

• Stocks For The Long Run: Next, we’ll look at why stocks have historically delivered stable and superior long-term returns 📈

• Stocks Versus Bonds: Finally, we break down why stocks might still be your best bet 📊

We hope you’ll enjoy today’s articles. Have a great weekend, and we’ll see you next week!

Berkshire Hathaway Has Raised Over $100 Billion This Year—Its Hoard Could Hit $300 Billion This Quarter 💰

Berkshire Hathaway’s cash position could hit $300 billion at the end of September because of its sales from its equity portfolio and another strong quarter for earnings offset by what’s probably going to be another light quarter of stock repurchase activity.

Berkshire ended the second quarter with cash and equivalents (mostly Treasury bills) of $277 billion, up from $168 billion at year-end 2023.

A good chunk of Berkshire’s earnings could end up as cash on Berkshire’s balance sheet because CEO Warren Buffett dramatically slowed the company’s stock repurchase activity in the second quarter to $345 million, the smallest quarterly total in more than five years and down from $2.6 billion in the first quarter.

Some of the cash build up will be used to buy attractive assets at a later date 📅

Stocks For The Long Run 📈

The long-run real (inflation adjusted) return on stocks has averaged 6.8% a year since the year 1802.

In the past 30 years, we had a financial crisis, the Covid pandemic, and other ups and downs, and the real return still averaged 6.5% to 7% a year.

That is the power of the persistence of long-term real returns.

Although stocks are the most volatile asset class in the short run, they are the most stable asset class in the long run 😌

No other asset class in the U.S. has achieved that over any longer time period.

Bonds, gold, and real estate can’t match the real return of diversified publicly traded equities.

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Stocks Versus Bonds 📊

With the P/E ratio on the S&P 500 at around 20 today, it could mean that inflation adjusted returns on the S&P 500 fall from 6.7% to 5.5% or so.

Some people argue that if that’s the case, they should just park their money in bonds or a money market and get close to 5%.

But those returns don’t take inflation into account.

Once inflation is taken into account, that reduces returns on bonds and money market funds to no more than 2%, so stocks deliver substantially higher inflation adjusted returns 🤑

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