Buffett’s Berkshire Hathaway hoarding cash in a pattern seen before the financial crisis

The Journal speculates on Buffett’s largest ever pile of cash. The Wall Street Journal is gated, but here is a quick summary of the pice:

• Warren Buffett’s Berkshire Hathaway holds $325 billion in cash, mostly in Treasury bills. It remains cautious on new investments.

• Berkshire recently sold parts of its holdings in Apple and Bank of America and has paused stock buybacks, indicating a conservative stance.

• Historically, Buffett and Munger avoided market timing, focusing on long-term compounding, but they’ve built cash reserves in times of high valuations, such as before the 2008 crisis.

• Analysts, including Goldman Sachs and Vanguard, predict low stock returns (3%-5% annually) for the next decade, aligning with Buffett’s own “Buffett Indicator,” which shows U.S. stocks are overvalued at 200% of GDP.

• Buffett expressed interest in acquiring a large company ($50-100 billion) if a suitable opportunity arises.

• With high T-bill yields and expensive U.S. stocks, Buffett may be keeping “dry powder” for future opportunities; Berkshire has favored the U.S. market but has diversified slightly, including recent profitable bets on Japanese trading firms.

What do traders think, reason to be careful? Buffett is not viewed as a monumental investing legend for nothing! Or, nah, nothing to worry about?

S&P 500 daily candles. Ps this chart is not in any way related to Buffett’s preferred holding period, which he describes pithily as “forever”.

This article was written by Eamonn Sheridan at www.forexlive.com.