To The Moon

$S&P 500(.SPX)$ $Berkshire Hathaway(BRK.B)$

Warren Buffett, the 93-year-old investing legend and longtime CEO of Berkshire Hathaway, has officially announced his departure from the top job. As he steps aside, Buffett isn't just passing the torch—he’s also handing over the largest cash reserve in corporate history.

Buffett’s final act as CEO appears to be a masterclass in market timing. Since early 2024, he has offloaded tens of billions in equities, more than doubling Berkshire’s cash reserves from $167 billion to a staggering $348 billion. And the timing? Remarkable. He built up this war chest right before the stock market began tumbling in early 2025.

A Cash Reserve Bigger Than Wall Street's Giants

To understand just how monumental Berkshire’s current cash pile is, consider this: it now exceeds the firm’s entire public stock portfolio, which is worth approximately $263 billion. Berkshire also has more cash on hand than tech titans Apple, Amazon, Alphabet, and Microsoft combined.

Put another way, Buffett could buy every NFL and NBA team outright and still have roughly $34 billion in change. That’s the kind of financial firepower most CEOs could only dream of. But while Buffett isn’t likely to turn Berkshire into a sports empire, his strategy begs the question: What’s he planning to do with all this cash?

Outperforming the Market Once Again

Buffett’s investment record needs no embellishment. Over a six-decade career, he has delivered an average annual return of 20%—doubling the 10% average return of the S&P 500. That performance gap has compounded massively over time, creating one of the most successful investment track records in history.

Even this year, Berkshire Hathaway stock has continued to outperform. While the S&P 500 has eked out a 2% year-to-date gain, Berkshire is up nearly 10%. That’s no small feat in a turbulent market environment.

So Why Is the "Buy and Hold" King Selling?

Buffett’s investing mantra has always been deceptively simple: buy great businesses and hold them for the long haul. Yet recent activity shows he’s been doing the opposite. Over the past ten quarters, Berkshire has been a net seller of equities—offloading more stock than it has purchased.

In 2024, Berkshire dramatically reduced its stake in Apple, selling over 600 million shares worth approximately $117.6 billion. This amounted to a 67% reduction, even though Apple remains Berkshire’s largest single holding. The decision surprised many, especially given Buffett’s earlier praise of Apple as “probably the best business I know in the world.”

That wasn’t the only major move. Berkshire also sold 41% of its position in Bank of America and trimmed stakes in several other financials. While these moves may appear to contradict Buffett’s “buy and hold” philosophy, they’ve clearly paid off: since the beginning of 2025, Berkshire has pulled ahead of the broader market by nearly 30%.

Reading the Market With the “Buffett Indicator”

Although Buffett rarely tries to call market tops or bottoms, he does rely on certain valuation metrics to assess risk. One of his favorite tools is the so-called “Buffett Indicator”—the ratio of total U.S. stock market capitalization to GDP.

Buffett has called this the best single measure of overall market valuation. When the ratio exceeds 100%, the market is considered overvalued. Today, the ratio stands near 200%, a level that historically preceded the Dot-Com Crash in 2000 and the Financial Crisis in 2008.

While valuations alone don’t predict timing, they do suggest how far markets could fall during a correction. That context helps explain why Buffett moved so aggressively into cash in 2024. He wasn’t panic selling—he was positioning Berkshire to withstand volatility and take advantage of potential bargains.

Where Is the Money Now? Safe and Earning

Buffett’s cash isn’t sitting idly in a vault. The overwhelming majority—about 88%, or $305 billion—is parked in short-term U.S. Treasuries. These government-backed securities currently yield around 4%, meaning Berkshire is earning roughly $12 billion per year in guaranteed, risk-free income.

In fact, Berkshire now owns more U.S. Treasuries than even the Federal Reserve.

And in the current environment, those Treasuries are not just safe—they’re profitable. Inflation has cooled, while interest rates remain elevated. That means holding cash equivalents isn’t just defensive—it’s a way to earn steady returns without exposure to the stock market’s turbulence.

Stocks Look Riskier by Comparison

To appreciate why Buffett might prefer short-term Treasuries to equities, consider the earnings yield of the S&P 500—which currently sits at a historic low near 3.8%. Subtracting the 4.3% yield of a 3-month Treasury bill, the spread is now negative.

That’s a 23-year low and a major red flag for traditional equity investors. It means that investors are getting better risk-adjusted returns from Treasury bills than from stocks, flipping the usual relationship on its head.

In that context, Buffett’s heavy cash position makes perfect sense.

Waiting to Bag an “Elephant”

Buffett isn’t just hoarding cash to weather a storm. He’s also preparing to go on the offensive.

He’s often referred to Berkshire’s cash as his “elephant gun”—ammunition to be used when a major acquisition opportunity arises. And historically, Buffett has made his biggest moves during moments of market distress.

During the COVID crash in 2022, Berkshire invested over $50 billion, scooping up stakes in Chevron, Occidental Petroleum, Ally Financial, and others. In 2008, he made a $5 billion deal with Goldman Sachs at the height of the financial panic—one of the most profitable trades of the decade.

If history is any guide, Buffett may be biding his time, waiting for prices to drop further or for more clarity on macroeconomic risks, such as renewed trade tensions or policy uncertainty around tariffs.

Some analysts believe he’s holding out for a deeper correction. According to Berkshire’s 13F filings, there haven’t yet been any major equity purchases in 2025, suggesting Buffett is still playing defense.

What Comes Next for Berkshire’s $348 Billion?

So what will Buffett—or his successor—do with the company’s historic cash pile?

Some possibilities:

• Sit tight through the downturn, earning $12 billion per year while preserving optionality.

• Pounce on a distressed acquisition, snatching up a high-quality business at a fire-sale price.

• Deploy capital into undervalued stocks if the market sinks far enough to provide a margin of safety.

Whatever happens, one thing is clear: the decision will be rooted in Buffett’s most famous investing principle:

“Be fearful when others are greedy, and greedy when others are fearful.”

As the rest of the market scrambles to react to volatility, Buffett's steady hand—and Berkshire’s mountain of cash—are reminders that patience, discipline, and preparation still matter.

And even in his absence as CEO, Buffett’s legacy—and his philosophy—will likely shape Berkshire Hathaway’s decisions for years to come.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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