Speaking of de-risking, here's some fun with numbers. Not solid reasoning, just fun.

Markets were clearly pretty exuberant in the late 1990s, including many of Berkshire's stock holdings. Mr Buffett, hesitant to pay tax on unrealized gains, managed to de-risk by doing the Gen Re merger and instantly turning the portfolio into a bond-heavy one without paying tax on the equity gains. Gen Re turned out to be worth rather less than thought at the time, but it was in several other ways a genius move. The broad US market peaked in March 2000, 1.75 years after Mr Buffett announced that de-risking transaction in June 1998.

Fast forward 26 years...

Berkshire's cash position as a percentage of portfolio size is normally in a range, topping out at about 36% at the highest. The recent serious stock sales and cash raising started in Q2 2024, at the end of which cash was up to 45.5%, continuing to the 51-54% range in recent quarters. I'm not sure which month the de-risking began in a big way, but let's say the middle of that stretch, May 2024. 1.75 years after that would be January 2026 : )

You heard it here first!

For a bit more numerology on that, the smoothed real earnings yield of the S&P 500 at the time of the June 1998 derisking was 2.86%, equating to a P/E on cyclically adjusted earnings of 35. The equivalent figure at the time of the ~May 2024 derisking was about 3.0%, equating to a P/E of 33.4, pretty similar to the 1998 moment. The current level equates to a cyclically adjusted P/E of 37.6.

Jim