Random comments

I think that it's not unreasonable to believe that US stock valuations are such that the most likely outcome of broad US market isn't a good return in the next several years. Down for a while seems plausible, or (equivalently) net flat for quite a long while. Always with the caveat that prices can do anything for a while--the market can remain irrational longer than you can remain solvent, as the saying goes.

However I would not feel that owning (long) puts on Berkshire is worthwhile. In your shoes I'd sell 'em, but that's just me. Berkshire isn't in a price bubble. There is no material chance of a permanent loss of capital over the next couple of years that I can see, merely perhaps a transient price dip. Bear markets do end. The key is to own things that aren't particularly overvalued, so when the bear market ends the price comes all the way back (and even more), which Berkshire should be good at. Sure, Berkshire's price is likely to slide along with the broad market for a while, with high short term correlation. But over a couple of years the correlation disappears, and value matters more.

A big problem with protective puts, by the way, is having a really good strategy for when to close them, which is hard to do. Decide in advance what your strategy will be, and stick to it.

Or maybe you decide you want to own some puts because you think they might be a profitable trade, but really, there must be better underlying tickers to choose if that is your thinking. If you're just trying for a profitable trade there is no big reason to have the puts against the same ticker as your long position.

If you have things other than Berkshire in your portfolio that concern you more on the bubbly-prices front, then perhaps lightening up on those might make sense. Or even buying protective puts, though it would not be my first choice.

Cash is nice. It can be used in so many different ways, on short notice.

I have a quant screen that picks firms big enough to have options trading, reasonably likely to be losers, against which to buy puts. Around 40% of the stock prices go up (often a whole lot), so lots of the options are entirely worthless. But of the ones that go down, the average drop in 3 months is about -37%. I might buy a few of those puts for fun. I don't need my portfolio hedged, and protective puts generally lose money on average over time, but the one nice thing about them is that when they do occasionally pay off, they do so at a moment that it's usually great to have spare cash to go shopping for good deals. My most profitable month ever, in percentage terms, was September 2008.

Jim