16. Do you have a policy for staying fully invested? If so, what is your definition of fully invested? What factors would lead you to hold more or less cash? Is there a maximum amount of cash you are likely to hold?

We do not have a policy for staying fully invested. We will hold cash or fixed income while we look for companies that meet our criteria and that we believe will generate the returns we require. We do run a diversified portfolio, so we think in terms of no more than 5% of our assets in any one company, or a minimum of twenty companies. If we could only find ten companies that met our criteria, we would be 50% invested in equities, and the other half would be in cash or fixed income while we redoubled our search. A climate change, such as we discussed in Question # 9, could lead us to hold more or less cash. If we thought that conditions were ripe to cause a Depression similar to what his country saw in the 1930’s, we would fully invest in US Treasury Bonds, because in a Depression you want to own Government Bonds. If we believed that we were due to repeat the economic and investment conditions prevalent from 1968-1981 we would go to cash and then look for investment opportunities in real estate and possibly commodities.