Berkshire Hathaway's annual shareholder meeting is currently underway. Mr. Buffett, often regarded as a perpetual mentor, offers insightful interviews from which we can learn a great deal.
First, he is 95 years old. Throughout his 60-year investment career, only five years have been exceptionally profitable. He also remarked that he has never seen a crowd with such a strong gambling tendency. This statement serves as a serious warning, yet coming from him, it likely evokes no hostility—because it is an objective fact.
Where does Mr. Buffett's wisdom lie? He stated that he dislikes speaking to people in a certain manner. Worrying about events themselves holds little significance. While it is necessary to remain清醒 of potential risks, indulging in worry is not only unhelpful but can be harmful. He also dislikes煽动 emotions of impending doom.
This is his高明之处. He has already taken ample safety measures, maintaining a cash reserve of $380 billion. He says, "I am not buying now." But he does not tell you not to buy. He does not predict that the market will fall, nor does he煽动 a doomsday atmosphere. He simply states that he is not buying now, but within three to five years, he will find opportunities to deploy the capital.
Translated, his message is: "Go ahead and gamble, I won't stop you. I'm 95 years old and have never seen such a gambling-inclined crowd. Go ahead and bet. I won't predict when a decline might happen, but I am not buying."
This essentially indicates that U.S. stocks are at such an extreme historical high that even Mr. Buffett dares not directly warn of the risks. This demonstrates the market's underlying strength.
How did such high valuations form? Firstly, the U.S. 401K pension system now holds $49 trillion. Secondly, foreign investors injected over $100 billion in 2026. Thirdly, corporate buybacks exceeded $1 trillion. Additionally, the index design mechanism—comprising only a select few stocks and regularly removing underperformers while adding strong performers—plays a key role. More critically, pension funds contribute a fixed amount periodically.
All these forces are upward pressures; how could valuations not be high? The index design, pension funds, global allocations of $17.5 trillion to U.S. stocks, regular passive investments, and buybacks create a近乎 perfect system that naturally drives prices up. However, every rise has its limit, and a correction is inevitable.
Yet, even Mr. Buffett avoids offending anyone. His message is: "You go ahead and gamble." He also admits there are industries he does not understand, which is客观. One cannot expect a single person to know everything.
Historically, within 60 years, U.S. stocks have indeed experienced five exceptionally profitable years, so he is not worried about being unable to deploy the $380 billion. In reality, he holds a bearish view but prefers not to state it explicitly. No one is so benevolent as to announce it outright, as doing so offers him no benefit. If he predicted an imminent decline, all his opponents would attack him—a burden he, at 95, cannot bear.
This is his高明之处. He has issued a warning but is under no obligation to specify that a decline will happen tomorrow. He has never made such a statement, nor has he sufficiently alerted the market to the risk of a fall. He has no need to say it; why should he inform you? He is not a securities analyst; he is a fund manager. A fund manager has no duty to disclose everything—it is not his responsibility.
Notice how he emphatically explains, "I don't have $400 billion in cash; I have $380 billion." What's the difference between 380 and 400? Minimal. By telling you he is holding cash, he is implicitly expressing a bearish outlook. He is effectively shorting the market through his holdings, just without engaging in short selling. Unlike others who might declare, "I am shorting," he refrains from doing so and avoids warning of a potential drop.
Why would he warn you? What benefit would it bring? Of course, it's also possible he simply doesn't know himself.
Nevertheless, someone must still highlight the risks. Although not necessarily correct, U.S. stock valuations are undeniably high—the total leverage ratio is at the 97th historical percentile. With such elevated levels and so many optimistic investors, isn't this a classic risk scenario? I dare not predict when a correction will occur, but the fact remains that stocks are expensive, and someone ought to sound the alarm.
In reality, however, such voices are scarce. If you claim there is risk, wouldn't the $49 trillion in pension funds take issue? That's the logic. Collectively, this has fostered a massive bubble.
Consider the Buffett Indicator—why is Mr. Buffett reluctant to discuss it? He is afraid; speaking out offers him no advantage. Anyone can calculate it: a $75 trillion market capitalization versus the GDP? Isn't that a bubble? A blatant bubble, yet no one admits it.
Many believe AI might provide solutions... that is also a possibility.
Well, that's all for now. Goodbye.
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