ROI-Haven or dry powder, cash did fine in March, just ask Buffett: Mike Dolan

By Mike Dolan

LONDON, April 1 (Reuters) - If Warren Buffett is happy for Berkshire Hathaway BRKa.N to load up on more cash, who needs to search for another safe haven?

Even though Berkshire has reported ending 2025 with a monster $373 billion cash stash, the cash pile appears to have been largely sustained and the conglomerate's legendary chairman claims they moved another chunk of money there this week.

"We bought $17 billion this week ... of T-bills," Buffett told CNBC on Tuesday, adding that beyond "one tiny purchase" they have not seen an awful lot else to buy and the cash position remained "somewhere north of $350 billion."

As to whether the stock market shakeout in March had cheapened things enough to make it more interesting, he dismissed the correction with characteristic bluntness: "This is nothing."

Buffett has always been clear that Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses - meaning that the cash pile is opportunistic, not defensive.

Buffett may be exceptional in many ways, but Berkshire's huge cash position says something about a market conundrum - finding an adequate safe haven in the kind of energy shock that's come with the Iran war.

It might be just as well to stay in cash, especially now that further Federal Reserve interest rate cuts appear to be off the table.

Gold clearly disappointed since the war broke out, clocking one of its worst months since 2008 despite stellar gains over the previous year and tarnishing its credentials as a safe haven that benefits from broader turbulence.

Treasury bonds more generally proved to be a leaky portfolio insulator once again - having failed to perform that function adequately at any point over the turbulent second presidency of Donald Trump so far.

As Carlyle research noted, during the three significant stock market retreats triggered by geopolitical jolts over the past year - the tariff shock last April, the Greenland row in January and the Iran war last month - Treasury prices fell in tandem with stocks.

"It's no longer reasonable to assume that Treasury bonds will provide the offsetting deviations from stocks that investors came to expect in the prior decade," Carlyle strategist Jason Thomas wrote.

"Bonds have sold off with stocks during each major shock of the last 12 months and the correlation between the monthly returns of stocks and bonds has moved from -25% to +50% since 2022."

LEAKY INSULATORS

That might change if recession or deep interest rate cuts were in the mix, but neither is on the radar yet despite twin hits to inflation and growth.

Manufacturing surveys in March showed the artificial intelligence boom and global trade in AI-related hardware continuing to build despite the Middle East conflict and energy squeeze.

Full-year S&P 500 earnings growth has nudged higher to 17% over the past month, even as 12-month forward price/earnings valuations fell back more than 10%.

Better to be in commodities and related stocks then, perhaps.

Much of the trade and political tension of the past year has been crunching global supply chains and rendering scarce resources even more scarce - including inputs and raw materials needed for armaments and missiles.

Beyond the surge in oil and natural gas prices themselves, the CRB core commodities index jumped almost 20% last month.

For Societe Generale strategist Manish Kabra, these recurring shocks - which seem to be a feature in the Trump presidency - are an excuse to build positions in the physical economy - power, grid, infrastructure, automation and strategic resources.

"Investors would be best positioned via industrials, utilities, materials and energy," he told clients, noting that the impact of oil shocks typically hinges on just two things - duration and the Fed reaction.

Still, spare a thought for humble dollar cash. After a no-show during last year's tariff farrago, it has regained its composure.

Buffett seems happy to load up on more T-bills at interest rates of about 3.6%. For non-U.S. investors, the returns look even better: a near 3% rise in the dollar's .DXY index against the major currencies has added a further cushion.

Cash may not exactly be king, but it did a trick last month that bonds or gold have failed to do. It would have taken the edge off the 6-8% shakeout in the S&P 500 at least.

And while everyone's still debating what historic market reference points to use for this war, the March market moves will already have entered investment almanacs as one example of what to do going forward.

(The opinions expressed here are those of Mike Dolan, a columnist for Reuters.)

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