Buffett’s cash pile just got even larger
Warren Buffett just announced he's stepping down as CEO of Berkshire Hathaway – and he's leaving his successor a massive pile of cash. Since 2024, Buffett has sold off a massive amount of stock, more than doubling Berkshire's cash position from $167bn to $348bn.
And just in time too – he's built this cash pile right before the market crashed in the first quarter of 2025.
Past performance isn’t a reliable indicator of future results
Why Berkshire is holding more cash than stocks
Now Berkshire Hathaway is sitting on its largest cash reserve ever – more than they own in public equity, which is around $263bn – and more cash than Apple, Amazon, Alphabet and Microsoft have combined. To put it in perspective, $348bn is enough money to buy every single NFL team and every single NBA team and have $34bn left over.
That may not be Buffett's plan with all that cash – but what does he plan to do with it? And did he know a crash was coming?
There's a reason so many people look to Buffett for their cues on how to feel about the stock market. He's considered one of the greatest investors of all time. Here you can see returns on the stock for Berkshire Hathaway versus the S&P 500. He's beaten the index persistently through his six-decade investing career – averaging 20% annual returns versus 10% for the S&P 500.
Berkshire's superior returns are even more pronounced when you look at this year so far. The S&P is up around 2% year-to-date, but Berkshire's stock price is up nearly 10%.
Did Buffett see the market crash coming?
But lately, he hasn't been holding – he's been selling. Just look at Berkshire Hathaway's net equity sales versus acquisitions. You can see they've sold more than they've bought for the last 10 quarters in a row. Among those sales were over 600 million shares of Apple stock in 2024, worth an estimated $117.6bn. This reduced Berkshire's stake in the tech giant by 67% – though it's still their biggest holding.
Buffett once called Apple “Probably the best business I know in the world.” so his massive sell-off last year came to many as a surprise. They also sold 41% of their stake in Bank of America in 2024 and trimmed other financials as well.
These sales seem to go against Buffett's mantra of “buy and hold” – but the move has paid off for him. If we look at the ratio between Berkshire stock and the S&P, we can see Berkshire pull ahead by nearly 30% against the rest of the stock market since the start of 2025 – breaking out against this key resistance level that's been tested multiple times since 2023.
That's certainly an impressive feat most companies would be envious of. But Buffett probably wouldn't take credit for predicting the market. Instead, he would point to this chart. It's a simple tool he uses to measure whether stocks are too expensive or not. It's called the Buffett Indicator. It compares the stock market capitalisation to the size of the economy – in this case, the entire S&P 500 market cap divided by US GDP.
Buffett once called it “The best single measure of where valuations stand at any given moment.” Anything over 100% is considered overvalued – and we're way above that now, standing at all-time highs of around 200% today.
This overvaluation is causing many investors to feel cautious about the potential downside as stocks have begun to correct. Valuations are not the best tool for timing a market drop – but they are a strong indicator of how far it could fall when the correction hits.
Previous peaks in this indicator came just before the 2000 dot-com bubble burst and again before the 2008 financial crisis. And it's been steadily going up since around 2009 – implying that a big downturn is imminent.
So it seems that Buffett building his cash reserve wasn't merely cautious saving – it was deliberate preparation for market turbulence. A reminder of why he's sometimes called the Oracle of Omaha.
And it's not like that $334bn is doing nothing for him in the meantime. The majority of Berkshire's cash pile is actually invested in US Treasuries – 88%, or $35bn, to be exact. And for all intents and purposes, Treasuries are as good as cash. In fact, Berkshire Hathaway owns more US Treasuries than the Federal Reserve.
And those Treasuries are on track to earn Berkshire a healthy $12bn in risk-free returns guaranteed by the US government. That's still far short of the S&P 500's 10% average annual return – let alone Buffett's own 20% annual average.
Historically, holding cash or cash equivalents like Treasuries has meant depreciating value due to inflation – with a few notable exceptions when interest rates were higher than inflation: during the 2008 financial crisis, briefly during the pandemic, and today.
Even though interest rates are on the way down, they're still above inflation – and that means Treasuries provide an all-but-guaranteed healthy return without taking the risk that comes with stocks.
There's another way of looking at this – and that's by comparing earnings. Here's the earnings yield on the S&P 500. It's currently at a historically low level – just over 3.8%. If you take that yield and subtract the yield you get on a 3-month Treasury bill, you get the spread between the two – and right now it's negative, sitting at a 23-year low.
That means the stock market earns a lower yield than short-term Treasuries – which currently return around 4.3%.
Is Buffett preparing to buy big again?
So Buffett's massive cash pile could be seen as the world's biggest rainy day fund – a safety net for a crash, just like we're seeing now. But there's another reason to have a bunch of cash on hand – and that's to bag an elephant.
Well, that's how Buffett puts it. He calls Berkshire Hathaway's cash pile his “elephant gun” – ready to fire when he sees his chance to buy a large company that meets his high standards. He has indicated that he's in the market for such an elephant – and it's been a few years since Berkshire's last major acquisitions.
During the 2022 bear market, according to Berkshire's 13F filings, Buffett deployed over $50bn into stocks – one of his most aggressive buying sprees since 2008. He scooped up shares in Ally Financial, Chevron, Occidental Petroleum and other companies as the market dropped.
The recent market plunge might just be the opportunity Buffett was waiting for – to make a large acquisition or build new positions. Historically, he thrives in such environments – as seen in 2022 or in 2008 with his Goldman Sachs deal. He waited for a moment of extreme fear to bet on fundamentally strong businesses.
But some sources indicate he might be holding off – waiting for lower prices or a clearer economic outlook. For instance, Business Insider notes that Buffett's followers expect he may require a larger market drop to make significant purchases. And his actions suggest caution due to concerns about Trump's tariffs – which are the biggest since the 1930s.
Steve Hanke, an economics professor, suggests Buffett's next move will signal his view on the economy.
Whatever Buffett plans to do with Berkshire's $334bn in savings – ride out a downturn or acquire a company – it's reasonable to expect that it will fall in line with his time-tested philosophy:
At Capital.com, we’ll continue to keep you updated on market developments. For more context, explore the latest list of Berkshire Hathaway’s top holdings.