I have always had a sneaking feeling that the credit crunch had yet to deliver its major conclusions. As the euro heads for hell in a handbasket and stock markets hunker down, I wonder whether the vast (for me) amount of cash I have been sitting on for ages is enough.
And yet at the same time, heaven help me for being one of life's optimists. It will all work out OK in the end. Markets will be higher in ten years' time than they are now.
To rationalise that: my conviction that markets should currently be lower is based on an inaccurate perception of myself as a person with a brighter than average view of the longer term future. Others too are optimistic. I guess that's reassuring, when you think about it.
As I was struggling with these reflections, someone sent me a transcript of the question and answer session at Berkshire Hathaway's annual general meeting on 5 May. Between 10.30am and 5pm (breaking only for lunch) Warren Buffett and Charlie Munger answered questions on all subjects from 37,000 shareholders gathered in and around a stadium.
Buffett does not worry about bad news. He likes lower stock prices. I first read his analysis of this about 15 years ago. I remember it well because it made a big impression on me. Basically, if you're a net buyer of stocks and shares, you should prefer them to be cheaper. Very simple. He goes over it again in detail on page 7 of Berkshire Hathaway's current annual report.
But the transcript contained an even starker exposition of this philosophy. Asked whether systemic fears ever made him pause, Buffett replied, "There will always be good news and bad news… there is a ton of that. I bought my first stock in June of 1942. We were losing the war, the battle of Midway. My older friends had disappeared. We were building battleships and losing."
In 1942, the destruction wrought by World War II was just moving up through the gears. Yet the world came back from that in less than a generation. What we face now is modest in comparison.
More pointedly, Buffett and Munger described how they pay two of their newest employees - Todd Combs and Ted Wechsler - who were appointed last year with a view to taking over in due course as the decision-makers in charge of Berkshire's investment portfolio, which is not far off $200bn. Combs ran a small hedge fund. Wechsler had a significant stake in a much larger fund he had founded 10 years earlier, which had an outstanding performance record.
Again, the formula is very simple and indeed is standard issue for Berkshire. They get a base salary of $1m, plus 10 per cent what their portfolio delivers over and above the S&P 500 on a three year rolling basis. Apparently this is the same pay package accorded Lou Simpson, a legendary investment manager who ran funds for Berkshire's big subsidiary, GEICO, for 30 years. Except that to encourage collaboration, Combs and Wechsler are each paid 80 per cent of their own outperformance and 20 per cent of the other's.
Their base salaries are modest bearing in mind they each run nearly $3bn. For that sort of money, a hedge fund would charge up to $60m as a basic annual fee and - at least traditionally - would be gunning for 20 per cent of the profits with no hurdle such as the S&P 500 in the way.
As Charlie Munger noted, "At least 90 per cent of US investment managers would starve to death on this formula." This is unquestionably true.
How should we interpret this information? It is impossible to ignore the fact that working for Berkshire Hathaway is a dream job where the recompense extends way beyond the pay. If Wechsler was previously charging the standard "2 plus 20", he was probably earning over $40m a year (famously, he met Buffett by paying $5m at two charity auctions for the prize of having dinner with him). So neither of them took these jobs for the money.
Only the deluded could hope that the rest of the fund management industry would deign to work on similar terms. And yet.
And yet, you could not have that industry without marketing, reporting and administrative expenses which swallow up a lot of the fees levied from its clients. And yet still there are untold billions left over to pay the undeserving for delivering just the tiniest fraction of what Berkshire Hathaway has delivered over the last 50 years.
These are parallel universes and most investors are in the wrong one.
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Alistair Blair writes the No Free Lunch column which you can read on his homepage. He is a past winner of the Business Writer of the Year Award, has worked in investment banking and fund management. E-mail: email@example.com