How Warren Buffett Will Make Billions While Economy Collapses by Investing.com

Investing.com – Warren Buffett has accumulated a record amount of cash, so he is ready to take advantage of deals and make attractive deals when the US economy declines, according to Steve Hanke, US economist and professor of applied economics at Johns Hopkins University in Baltimore (Maryland), Business Insider reported. .

According to Hankey, Buffett’s Berkshire Hathaway (NYSE:) has built a record cash reserve of $157 billion to tap when the economy collapses.

In addition to this amount, the group had Treasury bonds and other liquid assets at the end of September, which is about $50 billion more in the past 12 months.

This volume of cash has grown in part because Buffett and his team sold $5 billion of stock in the last quarter. And now they’ve sold another $44 billion.

“This is the same old Buffett,” Hankey said. “But he likes to fish in rough waters.”

“With the Federal Reserve putting the money supply at a steep decline not seen since 1933, Buffett is correctly anticipating the turbulent economic waters ahead,” Hankey notes.

Hanke says the businessman will capitalize on his ace in the hole once the economy collapses. “Let’s not forget that Buffett has made a lot of money over the years by lending to and bailing out distressed financial institutions,” he noted. “While Buffett waits out the economic turmoil and pressures to come, he is making good money.”

Thus, Hankey recalls, Berkshire spent $21 billion in five transactions in just 18 months during the financial crisis, when Buffett struck lucrative deals with Goldman Sachs (NYSE:), General Electric (NYSE:), Mars, and Dow Chemical (NYSE: 🙂 and Swiss Re (Switzerland Stock Exchange:).

In addition, Berkshire generated more than $4 billion in interest, dividends and investment income in the fourth quarter, an increase of 70% from the third quarter of last year.

In Hanke’s view, Buffett’s cash hoard means he is well positioned to buy discounted stocks and companies and lend money at attractive interest rates if the economy falters, and he will earn a strong, risk-free return while he waits thanks to the highest-yielding bonds.

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