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Warren Buffett's $334 Billion Warning to Wall Street Is a Critical Lesson for Investors. Here's What to Do If the Stock Market Crashes.
Over the course of the last few years, Warren Buffett has slowly amassed the largest reserve of cash and equivalents his Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has ever had on its books. While the now-$334 billion he has sitting on the sidelines makes more sense in the face of an uncertain market, Buffett began growing the reserve in earnest when things looked a bit different from today. The S&P 500 is down more than 10% since February, and many fear the possibility of a market crash.Berkshire has been a net seller of equities since 2022, but in early 2024, the activity accelerated, and Berkshire's cash pile nearly doubled in just a year, reaching today's lofty sum. Buffett's choice to grow his cash reserves while the market marched upward and optimism dominated was a warning to anyone on Wall Street who cared to look. The first half of Buffett's classic aphorism would seem relevant here: "Be fearful when others are greedy..."Although it's impossible to know Buffett's motivations with certainty -- there are, admittedly, other reasons why he may be growing such a large cash reserve -- what seems most likely to me (and why I call it a warning) is that Buffett grew uneasy with the state of the market and wants to position himself to not just survive, but thrive in a down market.Continue reading
Over the course of the last few years, Warren Buffett has slowly amassed the largest reserve of cash and equivalents his Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has ever had on its books. While the now-$334 billion he has sitting on the sidelines makes more sense in the face of an uncertain market, Buffett began growing the reserve in earnest when things looked a bit different from today. The S&P 500 is down more than 10% since February, and many fear the possibility of a market crash.
Berkshire has been a net seller of equities since 2022, but in early 2024, the activity accelerated, and Berkshire's cash pile nearly doubled in just a year, reaching today's lofty sum. Buffett's choice to grow his cash reserves while the market marched upward and optimism dominated was a warning to anyone on Wall Street who cared to look. The first half of Buffett's classic aphorism would seem relevant here: "Be fearful when others are greedy..."
Although it's impossible to know Buffett's motivations with certainty -- there are, admittedly, other reasons why he may be growing such a large cash reserve -- what seems most likely to me (and why I call it a warning) is that Buffett grew uneasy with the state of the market and wants to position himself to not just survive, but thrive in a down market.
