- Berkshire Hathaway currently holds $344.1 billion in cash and short-term investments.
- Over the last two years, Berkshire Hathaway sold a net $133.2 billion in stocks, shifting from buying to selling.
- Warren Buffett cites high tax rates and market overvaluation as reasons for holding cash.
- Berkshire Hathaway has reduced its holdings in Apple by 67.2% and Bank of America by 23% in recent years.
- The large cash position is about 28% of Berkshire’s market value, signaling caution amid a high market price-to-earnings ratio.
Berkshire Hathaway has amassed a historically large cash reserve of $344.1 billion, reflecting Warren Buffett‘s cautious stance on the current stock market. This cash hoard was reported in the company’s third-quarter results, showing a clear shift away from stock buying toward significant selling.
During the past two years, Berkshire Hathaway sold a net $133.2 billion in stocks, increasing its cash position from $13 billion in 2018 to the current total. The company has notably reduced its exposure to major holdings, including a 67.2% sale of its Apple shares since late 2023 and a 23% reduction in Bank of America stock during 2024.
“We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money,” Buffett said at the annual company meeting. He pointed to high tax rates as a factor influencing the decision, stating, “Current tax rates are very historical by historical standards.” He also admitted to difficulty in finding suitable large investment opportunities: “There are not many companies that we can be comfortable putting $10 billion, $20 billion, or $30 billion into.”
The market’s valuation level contributes to this cautious approach. The S&P 500 is trading with a forward price-to-earnings ratio of about 22 times earnings, well above its historical average of roughly 15.5 times. Berkshire’s substantial cash reserve, amounting to approximately 28% of its total market capitalization, signals a defensive strategy amid what Buffett considers overvalued market conditions.
Alongside this cash buildup, Berkshire Hathaway continues to generate steady earnings from its operating businesses, including insurance, BNSF Railway, and energy sectors. The company’s stock buying behavior often precedes major market shifts, positioning it to act when valuations normalize and investment opportunities improve.
For more details, visit the original article on Buffett’s cash warning and see Berkshire Hathaway and Buffett’s stock information.
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