Welcome to the Berkshire Annual Meeting (Tech Edition)

Pull up a chair. Looking at your portfolio, I had to double-check my glasses to make sure Charlie and I hadn't accidentally wandered into a Silicon Valley venture capital pitch. You’ve brought me a collection of accounts that look like they were built by a computer programmer in a hurry.

Now, my records tell me this portfolio is barely a month old in our books. You've got some eye-popping unrealized marks—Nvidia and Shopify are up in the stratosphere—but without a real track record or history to judge, I can't grade your investing skill just yet. Anyone can catch a good month or a lucky breeze; we won't know if you're a decent captain until we see how you handle a storm. So today, I’m not looking at your returns. I’m looking at the blueprint of the ship you’ve built. And looking at this blueprint, we need to have a serious talk about where you're putting your capital and what you're leaving behind.

Let’s look at how you’ve divided up the pie. You have roughly 37% of your capital in the technology sector, plus another 22% in communication and media. Throw in your consumer discretionary holdings, and nearly 80% of your strategy is classified as pure growth. You are betting the farm, the tractor, and the farmhouse on tech companies and artificial intelligence.

I see you own some wonderful businesses with deep economic moats. Amazon sits as your largest single position at nearly 12%, and you have meaningful stakes in Meta, Netflix, and Microsoft. These companies benefit from immense scale advantages and network effects. I always prefer a wonderful company at a fair price, and you certainly have the wonderful companies. Geographically, you are essentially betting on the American tailwind, with 92% of your money parked in North America. I've never believed it pays to bet against America, so that suits me just fine.

But here is the glaring issue: your cash reserves sit at exactly zero percent. You are fully invested to the very last penny. I like to say that cash is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent. With rates where they are now and Treasury yields sitting high, carrying zero cash means you have absolutely no dry powder. When Mr. Market gets depressed and offers you a magnificent business at a fire-sale price, your pockets will be entirely empty.

🚩 Zero Margin of Safety in Cash: You have zero idle cash. Being 100% fully invested might feel efficient, but it leaves you paralyzed. When the market inevitably panics, idle capital turns into the most valuable asset in the world. Right now, you have a loaded portfolio but an empty elephant gun.

🚩 Chasing the Parade: You hold thematic ETFs like the Roundhill Generative AI ETF (CHAT), a memory ETF (DRAM), and a data center supply chain ETF (RACK). This looks a lot like chasing what’s hot in the newspapers. Wall Street loves to invent new funds to sell you yesterday's trend at tomorrow's prices. Buy businesses you understand, not catchy ticker symbols trying to capitalize on a buzzword.

🚩 Over-Diversification Camouflaging Concentration: You have 32 distinct positions, but your top three holdings make up roughly 32% of your wealth. Meanwhile, you are holding slivers of companies like Apple at 0.4% or Applied Materials at 0.3%. Owning a tiny fraction of a percent of a business won't make you rich if it succeeds, but it will certainly distract you. You have multiple accounts overlapping with tech index funds, momentum funds, and semiconductor ETFs. You are paying managers to buy the exact same stocks you already own in your Robinhood account.

I'll give your portfolio structure a 5 out of 10. You own some truly exceptional businesses with enduring competitive moats, but your portfolio is heavily skewed, entirely reliant on growth multiples, and lacks the cash flexibility a prudent investor needs.

Here is what I suggest you do:

1. Build a cash reserve: Start keeping 5% to 10% in cash or short-term Treasury bills. The Fed is keeping rates high, which acts like gravity on asset prices. You want a reserve ready to deploy when that gravity pulls good companies down to great prices.

2. Trim the thematic weeds: Sell those hyper-specific AI and memory ETFs. If you want broad exposure, stick to a simple S&P 500 or Nasdaq index fund. You don't need a Wall Street marketing product to participate in technological progress.

3. Clean up the fractional clutter: Look at positions under 1%. If a stock isn't worth holding at a 3% or 5% weight, ask yourself why you own it at all. Consolidate your capital into your best ideas.

Charlie Munger always used to say that the first rule of compounding is to never interrupt it unnecessarily. Stop trying to buy every new trend. Build up some cash, hold your wonderful businesses, and let them do the heavy lifting for you. You only find out who is swimming naked when the tide goes out—make sure you're wearing a bathing suit.