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Billionaire Watch

Why Warren Buffett holds only 1% of his wealth in cash

Warren Buffett is estimated to be worth about $95.8 billion but keeps about $1.03 billion in cash.

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warren-buffett, Young Investors, Here’s why Warren Buffet's $4.6m lunch with Bitcoin entrepreneur is experiencing delay , What Warren Buffet will do if he traded Nigerian stocks
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The popular assertion, “cash is king” has been discounted by Warren Buffet, the world’s most powerful investor, as he currently keeps only 1% of his wealth holdings in cash.

Buffett, who is presently the CEO, Chairman and largest shareholder of Berkshire Hathaway, and estimated to be worth $95.8 billion, keeps about $1.03 billion in cash (1% of his net wealth).

The 90-year-old, self-made billionaire known for his high frugality spoke against the rationality of holding cash instead of purchasing stocks.

“The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worthless over time. But good businesses are going to become worth more overtime,” Buffett said.

READ: Why Warren Buffett is making less money now

The billionaire leads Berkshire Hathaway, the world’s most valuable multinational conglomerate holding company known for holding a multitude of businesses.

Berkshire Hathaway, wholly owns GEICO,  Fruit of the Loom, Helzberg Diamonds, Pampered Chef, Forest River, Duracell, Dairy Queen, BNSF, Lubrizol, Long & Foster, FlightSafety International, and NetJets, and owns minority stakes in public companies that include Apple, Bank of America, Kraft Heinz Company, American Express, and The Coca-Cola Company.

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Currently, the multinational conglomerate’s stock is the world’s most expensive equity asset to buy as it currently trades at $380,402.80 and has appreciated about 48% in the past year,

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According to a July 2020 stock exchange filing, the majority of the nonagenarian billionaire’s fortune is derived from a 15% economic interest in Berkshire Hathaway, a publicly-listed investment company.

READ: Young Investors can learn these tips from Warren Buffet

Warren Buffett’s current net worth of $95.8 billion can buy about 54.6 million troy ounces of gold or 1.49 billion barrels of crude oil.

What this means: Most wealthy investors including, successful tech entrepreneurs, fashion icons, and leading hedge fund managers would rather invest most of their funds in assets like stocks, real estate businesses, debt instruments, and lately crypto than hold a significant amount of cash in the bank because many banks offer unimpressive interest rates.

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READ: Want to be like Warren Buffet, Michael Phelps? Here are their secrets

In addition, cash is often exposed to inflation, and in some cases depreciate in value faster than financial assets like gold, Bitcoin.

However, it’s key to note that members of the world’s elite class keep a significant amount of cash primarily in case they need it for buying or investing in future assets.

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Message Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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    Billionaire Watch

    TikTok’s parent company, Bytedance now more valuable than Coca Cola and Exxon Mobil

    A company founded 9 years ago is currently more valuable than a transgenerational business like Coca Cola and Exxon Mobil.

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    TikTok announces $250 million pledge to aid combat coronavirus, Tiktok set to reduce misinformation on its platform
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    TikTok’s parent company, ByteDance which was founded in 2012 is now more valuable than the world’s biggest soda brand Coca Cola and energy giants, Exxon Mobil.

    ByteDance was founded by Zhang Yiming in 2012 and he went on to launch TikTok, a video sharing application in 2016. Tiktok immediately became a hit on the internet. In less than two years of its launch, it became the most downloaded app in the world according to Forbes.

    With over 500m active monthly users, TikTok quickly gained the attention of big venture capitalist firms who invested more in it.

    READ: Exxon begins talks with domestic firms to divest businesses in Nigeria

    Shocking comparisons 

    ByteDance was founded in 2012 and is currently more valuable than a company founded in 1892 (Coca Cola) and (1999) Exxon Mobil.

    ByteDance, according to its company profile has over 60,000 employees while Coca Cola and its 300 bottling partners employ over 700,000 people. Exxon Mobil has an estimated 72,000 employees.

    Difference in valuation

    According to Bloomberg, ByteDance is currently trading at a valuation of more than $250 billion in the secondary market. The number is set to go up with some investors pegging the valuation at $350 billion.

    ByteDance with a current valuation of $250bn is more valuable than Coca Cola which was recently valued at $235.33bn. ByteDance also beats Exxon Mobil which is currently valued at $237.08bn.

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    READ: Exxon Mobil to cut 14,000 jobs as pandemic hit oil demand, prices

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    What you should know 

    • The above story paints a clear picture of the power of the internet age. A company founded 9 years ago is currently more valuable than a transgenerational business like Coca Cola and Exxon Mobil.
    • According to Investopedia a valuation is the analytical process of determining the current (or projected) worth of an asset or a company.  An analyst placing a value on a company looks at the business’ management, the composition of its capital structure, the prospect of future earnings, and the market value of its assets.

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    Billionaire Watch

    Squarespace founder is the latest billionaire, set to make $3bn from listing his company

    The latest valuation of Squarespace sets Casalena up for a fresh $3billion, making him the latest billionaire in the market.

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    What is Squarespace?

    Squarespace is a platform that helps small businesses and individuals build customized websites and online stores for e-commerce. It is also a hosting company which is based in New York City, United States. It provides software as a service for website building and hosting, and allows users to use pre-built website templates and drag-and-drop elements to create and modify webpages.

    Who founded Squarespace?

    Squarespace was founded by 38-year-old Anthony Casalena seventeen years ago. The platform was founded in his dorm room at the University of Maryland. For many years, he was the only one running the platform. He launched the platform with a $30,000 seed fund and grants from his university and the platform reached a $1m valuation in 2006.

    READ: Mark Zuckerberg, youngest person ever to be worth over $100 billion

    Squarespace latest valuation and growth

    Last month, Squarespace raised a whopping $300m from investors who valued the company at $10bn. The successful outing prompted the decision by the Founder to go public.

    The company has grown tremendously since its inception in 2003. The number of subscribers increased nearly 23% in 2020, to 3.7 million users. The company also made a revenue of $620 million which was a 28% increase from the previous year according to Forbes.

    Squarespace employees have grown from just the Founder to 1200 employees across the United States and Ireland.

    READ: Clubhouse adds payment feature to enable creators to get paid on the app

    Anthony Casalena’s new net worth

    Following the latest valuation of his company at $10bn, Anthony Casalena is set to become a billionaire. According to Forbes Squarespace’s SEC filings revealed that he has a 33% stake in the company.

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    The latest valuation of his company sets him up for a fresh $3bn making him the latest billionaire in the market.

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    What you should know

    Squarespace is listing its company in the market using direct listing. A direct listing is a process by which a company can go public by selling existing shares instead of offering new ones.

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