Berkshire Hathaway posted its annual report today. Warren Buffett's annual letter to shareholders leads things off nicely, and I recommend reading it. As an aside, I think that if Google's Larry Page were to write such an annual letter, it might take some of the heat out of the speculation that has been growing around the company. He has written a shareholder's manual in the style of Berkshire Hathaway's, so why not an annual letter?
In any event, Berkshire Hathaway has about $45 billion in cash, up a couple billion from last year. There are other companies that have war chests: Microsoft has $34 billion and Google has $8 billion. So what's everyone going to do with these cash piles? The area mentioned in Buffett's letter as ripe for acquisitions and investment is electric utilities.
Boring, right? Well yes, mostly. However, with that kind of cash looking for businesses, I can imagine additional services being offered, such as broadband internet over the power line. Also, some alternative energies (or not so alternative energies, such as nuclear) might be able to move to a more cost-effective basis, if deployed on a mass scale. I worry that some of these companies might be looking for a government handout consisting of huge tax breaks or huge subsidies. But barring that, I view alternative energies favorably, especially solar, if they ever figure out a way to make solar panels and associated infrastructure cheaply.
My suggestion would be to wait til the present bubble (Real Estate, Equities and USDollar) bursts. Bonds, especially short termed, are more attractive than investing in anything that is surely at the moment way overpriced. Of course, my opinions will have to be vindicated by history, but it looks like Buffett agrees with me:-(
Posted by: Dom | March 11, 2006 at 05:12 AM