The stock market has recovered nicely from the 2022 bear market lows, and most major indices are within striking distance of their all-time highs. With expectations of falling interest rates and continued strength in megacap technology stocks, things are going quite well for equity investors.

However, it is important for all investors to know that the stock market will crash again – it’s just a matter of when. A crash could happen next month, next year, in five years, or tomorrow. We have no idea, and there are many potential factors that could cause a crash. But stock market crashes are a normal part of a long-term investor’s life.

I try to fill my own portfolio with stocks that should perform well over the long term, regardless of whether the market crashes or not. But there is one stock that I would own with confidence in a market crash, and that is Berkshire-Hathaway (NYSE: BRK.A)(NYSE: BRK.B).

A collection of recession-proof companies

First, Berkshire’s business consists of three main components: operations, the equity portfolio, and cash. The equity portfolio is clearly not immune to a stock market crash (although the types of stocks Berkshire owns tend to hold up better than most).

In terms of operations, there are over 60 different subsidiaries. Some of them could be vulnerable to market crashes and recessions, but Berkshire’s largest subsidiaries should be fine. GEICO and Berkshire’s other insurance businesses are a large and are almost crisis-proof. After all, people still pay their car insurance even when times get tough.

Berkshire Hathaway Energy is another important part of the company and is also very resilient. Even in difficult times, electricity and gas bills have to be paid. I could go on – BNSF Railroad, Pilot Travel Centers and Duracell are also great examples of companies that should definitely perform well.

Berkshire’s cash is the key differentiator

To be fair, there are plenty of recession- and crash-resistant companies to invest in. There is no shortage of utility stocks, for example. But what sets Berkshire apart from other companies is its unmatched financial flexibility.

At the end of the second quarter, Berkshire had a staggering $277 billion in cash and short-term investments on its balance sheet. The majority of that currently consists of Treasury bonds, which yield Berkshire about 5% annually.

However, if a stock market crash or a prolonged recession occurs, this cash reserve gives Warren Buffett and his team a huge war chest to take advantage of bargains. Berkshire can use it to buy stocks that have crashed or negotiate unique investment deals. In fact, Berkshire’s Bank of America The investment follows a $5 billion preferred stock and warrant deal that Buffett negotiated in the wake of the financial crisis.

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Berkshire in the stock market crash

Berkshire’s stock portfolio can become volatile in the event of a crash, but the company’s operating business should remain profitable and its cash can actually enable Berkshire to emerge from a stock market crash even stronger than it went in.

I am not saying that Berkshire Share price will not fall in a stock market crash. It can, and it has happened in previous crashes. But the point is that the company is in a better position than any other large company to survive a stock market crash largely unscathed.

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Bank of America is a promotional partner of The Ascent, a Motley Fool company. Matt Frankel has positions in Bank of America and Berkshire Hathaway. The Motley Fool has positions in Bank of America and Berkshire Hathaway and recommends these companies. The Motley Fool has a disclosure policy.

Will the stock market crash? I don’t know. That’s why I own this recession-resistant stock. was originally published by The Motley Fool