Warren Buffett's Empty Hook:  Is He Waiting for Big Discounts?

🌟🌟🌟If you are staring at the S&P500 and wondering why Warren Buffett has not pulled the trigger yet, you are not alone.  While the rest of us are buying the dip in April he is saying no to "bottom fishing".

Despite sitting on a monstrous, record breaking cash pile of USD 380 billion, Warren Buffett is choosing to wait.  For the Oracle of Omaha, a Big Decline isn't just a red day.  It is a fundamental restructuring of the market.

What a Big Decline Actually Means for Me

When the market drops another 10% to 20% it is more than just shrinking numbers.  It is a valuation reset that cleans out the expensive AI hype froth.

The Yield Boost:  As prices fall, dividend yields instantly rise.  The decline is a rare opportunity to lock in massive passive income from dividend stocks like DBS, OCBC and UOB.

The Correction of the Buffett Indicator:  A major drop brings the market in line with the actual economy.  Warren Buffett does not want to pay "tech bubble" prices for mediocre earnings.

The Buffett Indicator: Is the Market Flying Too High for the Economy?

The Buffett Indicator is essentially a Price to Sales ratio for an entire country.  Proposed by Warren Buffett in 2001, he famously called it "probably the best single measure of where valuations stand at any given moment".

It helps us to see if the stock market has detached from the real economy.  If stock prices are growing much faster than the GDP of a country, the indicator flashes a warning that we might be in a bubble.

As of April 2026, the indicator is signalling extreme caution.  The ratio is currently at 209%.  The market is considered significantly overvalued.  This is higher than the levels seen before the dot com crash in 2000.

The Buffett Strategy: What Would I Do?

If I have a USD 380 billion cash, I would be doing exactly what Buffett is doing : Sitting on my hands.  With USD 111 oil and Iran war, the rise of a "Black Swan" event is high.

I would keep my "elephant gun" loaded, collect my dividends and wait for S&P 500 to drop even further.

The "Elephant gun" is a famous metaphor used by Buffett to describe his massive pile of cash and his intent to only use it for "Big Game" acquisitions.

My Current Positioning :  The Index ETFs Anchor 

While Buffett waits for the "Big One" I will continue to dollar cost average or DCA into index ETFs:

$SPDR Portfolio S&P 500 ETF(SPYM)$ :  I am betting on the biggest engines of the US economy with a super low expense ratio of just 0.02%.

$SS SPDR STI ETF(ES3.SI)$  I am betting on the steady performance of Singapore's best blue chip companies such as the Big 3 - DBS, OCBC and UOB.

$iShares China Large-Cap ETF(FXI)$  I am betting on the top 50 biggest Chinese Giants listed in the Hong Kong Stock Exchange.  These include Alibaba, Tencent and Meituan.

Concluding Thoughts 

Market crashes and "Stone Age" headlines are merely the growing pains of a global economy that has survived world wars, pandemics and depressions, only to emerge stronger every time.

Warren Buffett has famously said 

"The stock market is a device for transferring money from the impatient to the patient."

It perfectly encapsulates Buffett's core philosophy with Patience as a strategy to build wealth through long term ownership of high quality businesses rather than short term speculation and trying to time the  market.

By remaining patient, I allow the power of compounding to grow my nest egg for retirement.

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