It finally happened. Earlier this year, Warren Buffett declared that he would be stepping down as CEO of Berkshire Hathaway (BRK.A -0.13%) (BRK.B -0.06%). Buffett is widely considered one of the best investors of all time. Experts have been trying to replicate his strategy for decades. But the simplest strategy was to invest alongside Buffett by purchasing Berkshire's shares directly.
Many investors now fear that it's too late to buy Berkshire stock. The truth, however, is that now could be one of the best times in years to buy into this legendary business.
Berkshire Hathaway has a gigantic advantage versus the market
Typically, you don't want the companies you're invested in to hold a huge amount of excess cash. Ideally, that cash would be invested into new growth opportunities rather than sit in a bank account or short-term vehicles with minimal interest rates. Businesses like Berkshire are the exception. Last quarter, the company revealed that it is now sitting on more than $300 billion in cash -- more than any other company in history.
"I've tried to reason my way through this a few different ways," Motley Fool analyst Matt Argersinger commented earlier this summer. "I think the evidence is undeniable that Buffett thinks or thought that valuations were expensive, and he was preparing Berkshire Hathaway for just that."
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While Buffett has long warned against timing the market, he has also urged investors to keep a close eye on valuations. If there isn't an obvious investment worth making, sitting on cash could be the wisest decision. Indeed, that's exactly what Buffett has done in recent years, leaving the firm with a huge cash pile upon his exit.
Right now, Berkshire is arguably better positioned than ever. Its core portfolio of businesses remains intact; yet, it has massive firepower to make huge deals should valuations plummet -- a rare advantage in bear markets. If you're nervous about the market but want to remain invested, Berkshire remains an incredible option, given its huge cash advantage.
