Let's talk about cash for a bit. Last week, the friend I refer to in my columns as the Lord of the Dark Matter pointed me toward the following comments by Alice Schroeder, a former insurance analyst and the author of the Warren Buffett biography "The Snowball." As reported in the Globe and Mail:
"Ms. Schroeder argues that to Mr. Buffett, cash is not just an asset class that is returning next to nothing. It is a call option that can be priced. When he thinks that option is cheap, relative to the ability of cash to buy assets, he is willing to put up with super-low interest rates, said Ms. Schroeder, who followed Mr. Buffett for years before she became his biographer . . . .
"'He thinks of cash differently than conventional investors,' Ms. Schroeder says. 'This is one of the most important things I learned from him: the opportunity of cash. He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.'"
http://money.msn.com/bill-fleckenstein/post.aspx?post=2b0b0cef-f19e-4b6b-a947-4e10fea1b945