When the world’s greatest value investor starts hoarding cash, it’s worth paying attention…
Warren Buffett’s Berkshire Hathaway is sitting on one of the largest cash piles in its history — both in absolute dollars and as a percentage of total assets. That’s not just a headline…
It’s a signal worth unpacking.
Leading up to the dot-com crash in the early 2000s, Berkshire raised cash. Before the Great Financial Crisis in 2008, Buffett was again raising cash. Now? Buffett’s cash hoard is at its highest levels since before the last financial meltdown.
Sure, the skeptics will argue Buffett’s underperformed the market in recent years — fine. But dismissing his actions would be short-sighted. Buffett doesn’t time the market. He prepares for opportunity. This level of caution, while the rest of the market is pounding the table with bullishness, makes me raise an eyebrow.
We’ve all heard his famous line:
“Be greedy when others are fearful, and fearful when others are greedy.”
Right now, everyone is greedy.
Mutual funds? Mega long.
Institutions? Mega leveraged.
Retail traders? Throwing cash at all-time highs in the Magnificent 7 stocks. Even leveraged single-stock ETFs are surging again, with traders loading up for more upside.
Meanwhile, Buffett is sitting on anywhere between $320 to $370 billion in cash, earning safer returns in money markets, Treasuries, or wherever he can grab 4-5%. That’s not because he’s scared of missing the upside.
It’s because he sees risk and wants to capitalize on the opportunities that follow.
Let me be clear: I’m not calling for a crash. The S&P 500 is up over 75% since the October 2022 lows, and momentum is still strong. But when market sentiment is this stretched — near 100th percentiles on risk-on readings — it doesn’t take much to spark a correction.
What’s the reward for chasing another 5% upside if the risk is a 10-15% pullback? Risk-adjusted returns are looking pretty weak here.
If anything, Buffett’s actions are a reminder to balance greed with caution. There’s no shame in raising some cash — or hedging your positions — when the market is sitting on such a thin ledge.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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