What I Own and Why

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It is commonly stated in the value investing community that you should be able to clearly explain why you own an investment in a few sentences or you probably shouldn't own it. Here I break down my investments along with a brief explanation of why I own each of them. I am currently in a bit of a defensive stance, hence the large allocation to Treasury bills, as I have had difficulty finding investments that make sense at current prices.

The S&P 500 is a low cost way to own 500 of the largest and most dominant public U.S. companies. In order to be added to the S&P 500 a company must have positive reported earnings in its most recent quarter, and the sum of its earnings over the previous four quarters must also be positive. This filters out companies that have yet to achieve profitability which is likely to produce a slightly higher quality group overall compared to a total market fund.

Treasury bills are short term loans to the U.S. federal government of 4-52 weeks duration, and since the government has the ability to tax its citizens and print money on demand, there is near zero risk of losing your money. Treasury bills are currently paying annualized interest of around 3.8% and are not taxable at the state level. They are marketable and mostly insulated from interest rate risk due to their short maturity, so you can quickly turn them to cash when opportunities arise. Treasury bills are comparatively attractive at the moment with the S&P 500 trading at a sporty P/E ratio of around 30, which when inverted implies only a 3.3% return based on current earnings [1].

Warren Buffett is the foremost authority on what makes an exceptional business, and Berkshire Hathaway is the business he created. Through the massive insurance operation at its core it generates float, which is money received from insurance premiums that will eventually have to be paid out in claims. Due to the company's large net worth in relation to float it is not limited to investing in low-interest fixed income securities like a typical insurance company, and instead uses the money to buy quality businesses likely to generate higher returns, both in the form of wholly owned subsidiaries and stock of publicly traded companies. Most years the float is better than free, meaning Berkshire is being paid to borrow the money, providing a near-ideal version of leverage.

The Wagons Fund is a mutual fund managed by Mohnish Pabrai, a personal friend of Warren Buffett and Charlie Munger, who closely follows Buffett/Munger investing principles but manages a much smaller sum of less than $1 billion compared to the hundreds of billions Berkshire Hathaway has to allocate. This allows Mohnish to pursue opportunities that are too small to move the needle at Berkshire, with the fund's top five holdings having an average market cap of just $2.4 billion. The fund trades at a P/E of 11 compared to 30 for the S&P 500.

[1] The S&P 500 return is understated when compared in this way because it is likely to grow over time as the earnings of its constituent companies grow whereas there is no reason to expect the treasury bill return to grow aside from temporary increases during periods of increasing interest rates

Last updated 12/12/2025

This essay is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as legal, tax, investment, financial or other advice.