Berkshire’s cash position hits record high as Buffett prepares to retire.
Buffett has historically been a lousy investor in bubble times.
Investors should heed this warning and invest cautiously in 2026.
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Berkshire Hathaway(NYSE: BRK.B) has more cash than the market caps of many large and well-known companies. With an estimated cash pile pushing $400 billion, the conglomerate led by retiring Warren Buffett is building up a safe-haven asset in US Treasuries as the rest of the investing world watches the artificial intelligence (AI) trade.
What is Buffett trying to tell investors? If we look at his long history as a stock investor, it’s clear that Buffett is giving investors a strong warning, even if he hasn’t said anything publicly. With the legendary investor retiring in early 2026, this could be seen as a final warning to Wall Street.
Here’s why you should pay attention to Buffett’s massive cash pile and what it means for investors in 2026.
Berkshire Hathaway has amassed cash since the bull market began in 2023, raising its accumulation from $100 billion to nearly $400 billion at last count. Much of that income comes from his stake Applewhich used to be valued at nearly $200 billion, but is now reduced to “just” $60 billion in Berkshire’s portfolio.
Buffett has reduced or completely sold many of his other holdings, such as Bank of America. He’s largely avoided the AI craze, though the company recently took a small stake Alphabetthe parent company of Google. Either way, Buffett and the Berkshire team say no, thanks to AI stocks dominating the market conversation.
That cash is held in short-term US Treasuries, which currently pay an annual yield of just 3.6%. That means Buffett doesn’t see returns in the stock market that exceed this risk-free rate, which is barely above inflation right now.
Image source: Getty Images.
While Buffett won’t come out and directly say what he thinks about the stock market and valuations in general, his actions always speak louder than words.
In 1968, when growth stocks were hot, Buffett decided to close his mutual fund and return money to his partners. The market subsequently had some of its worst inflation-adjusted returns since 1974. Buffett was called a latecomer and behind the times in 1999 during the dot-com boom. He was later vindicated for avoiding the consequences of the bubble burst from 2000 to 2002.
But today? Buffett raised a record level of cash for Berkshire Hathaway at a time when new technology (AI) is making bull market emotions catch on among investors. The S&P 500 The index is trading near a record average price-to-earnings (P/E) ratio, with each AI “Magnificent Seven” stock trading at a P/E ratio above 30.
Buffett isn’t hoarding cash because he thinks the bull market will end tomorrow. But he is a veteran of the business cycle and understands that it is now closer to boom times than crisis. If history is any guide, any time Buffett starts amassing a lot of cash, it means the stock market is going to underperform for years to come.
BRK.B Cash and Short Term Investment Data (Quarterly) by YCharts
No one knows what will happen to the stock market in 2026. It may be headed for a bear market next year, the year after, or maybe not for a few years. A bull market (or bubble) can last longer than many cynics think. Buffett is simply saying, with his cash position, that there are few attractive buying opportunities for investors today, and that he’d rather sit on his hands until cheaper valuations materialize. At this point, his offspring will be the ones dealing with the consequences.
An individual does not have to directly follow Buffett and start selling his entire stock portfolio. Each person is in a different situation and may have many years of income that can be deposited into a brokerage account, which Berkshire Hathaway does not have the luxury of.
However, I think Buffett’s cash position should be a warning sign to anyone who thinks stocks are only going up. Investors who trade on margin, use numerous options, or are heavily invested in highly speculative AI or technology stocks could quickly be caught staring into a market correction. Buffett won’t let that happen to Berkshire Hathaway. Don’t let it happen to you.
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Bank of America is an advertising partner of Motley Fool Money. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Warren Buffett Sends Wall Street One Last $400 Billion Warning: History Says Stock Market Will Do It in 2026 was originally published by The Motley Fool
