For once, it feels good to be in the Warren Buffett clan. Because while other billionaires are watching their net worths shrink in the ongoing crash, Buffett is probably smiling and sipping a cherry Coke. He made an estimated $13 billion (by 2025) during what some are calling one of the worst crashes in years. That’s no joke considering he runs Berkshire Hathaway’s $1 trillion behemoth—one wrong move can wipe out billions. So how does he stay so calm and keep winning? It turns out, his move wasn’t today. Buffett quietly began preparing for 2024, when market optimism is at its peak. Let me explain…
With all his warm charm, Buffett has returned to his classic playbook, and it’s as much about bold investing as it is about what not to do. While everyone else was cheering the bull run, Berkshire sold $134 billion worth of stock. So what did Buffett do with all that money? Nothing. He didn’t jump into private equity, buybacks, crypto, or chase the next AI boom. He invested that money in good old US Treasury bonds. Yes, boring but safe, predictable Treasury bonds.
Berkshire sits on $330 billion in cash today. That’s more than the combined value of Starbucks, Ford, X, the New York Times, Target, and Zoom! About half of that was added in 2024, and more than 85% of that is in short-term Treasury bonds yielding about 5% per year. That’s over $14 billion in annual interest income! Without lifting a finger. This begs the question: Why did Buffett do this?
First, Buffett is obsessed with valuations. He doesn’t care about hype. If something looks expensive, he’d rather wait than overpay. Or as he likes to say, “It’s better to buy a great company at a fair price than a fair company at a great price.” So when the markets went up, Buffett either saw a correction coming or he didn’t see any better opportunities than Treasuries, and he said so in 2024. Stock valuations were too high. His favorite market metric, the so-called “Buffett Indicator” (which compares the size of the stock market to the country’s GDP), was up over 200% late last year, a level he once described as “playing with fire.” So he didn’t.
While the Buffett Indicator isn’t perfect, other signals, like the S&P 500’s price-to-book ratio, screamed overvaluation. The last time that ratio was as high as it is today was during the dot-com bubble of the late 1990s. So Buffett, a value investor, liquidated as many stocks as he could and instead waited, and while others danced on the fire, Buffett walked away with a hose. Then there’s the macro chaos.
With Trump back and tariffs looming, Buffett probably didn’t want to get caught up in another economic war. He even went so far as to say that tariffs are a form of economic warfare, and when the world seems uncertain, Buffett’s first rule is simple: Don’t lose money. But there may be something else that’s driving him to hoard so much money. Buffett is 94 years old. His succession plan at Berkshire is already in place. His chosen successor, Greg Abel, will soon take over. So this pile of cash isn’t just a defensive play, it’s also a stick. It’s a war chest ready for his successor to deploy when the time is right. Because the truth is, Berkshire hasn’t been able to find big acquisition targets in recent years because everything has been so expensive. This isn’t his first rodeo, either. This is classic Buffett investing.
In 1999, when the dot-com craze was at its peak, Buffett sat back. Tech stocks were soaring, and Berkshire continued its old-school investing. Then the bubble burst. Buffett survived, grabbing opportunities while others nursed losses. He struck again in 2008. He saved Goldman Sachs and General Electric with stock deals that made them billions. Even during COVID in 2020, when things crashed briefly, he remained cautious—not because he didn’t have the money, but because the opportunity was so narrow, and that discipline, combined with Charlie Munger’s clarity and Berkshire’s long-term investing, helped Berkshire achieve a whopping 20% compound annual growth rate from 1965 to 2024. Which brings us to today.
The markets are panicking, but Buffett isn’t losing any sleep. Because if prices fall even further, he’s ready to buy. If they don’t, he’s happy to collect billions in interest, and that’s the beauty of having cash. It doesn’t just protect you, it gives you the freedom to wait, act, ignore the noise, and do what makes sense.
Sure, Buffett has more knowledge, more tools, and a huge team. But it’s not about having an edge. It’s about patience. It’s about finding the right price, and holding your nerves when everyone else is losing theirs. So the lesson is simple: You don’t need a billion-dollar portfolio to think like Buffett. You just need a little restraint. A little value awareness. And a little dry powder when things are on sale. Because when others are scared, Buffett gets greedy. And now that that fear is back, he’s probably ready to pounce again (for example, he sees value in Japanese companies and is investing there). If you’re there, congratulate yourself and good luck building your portfolio! If you’re not, now is a better time than ever to remember what Buffett taught us. What about cash? Cash allows you to make bold moves when fear takes over the markets. Because that’s when Buffett makes his move. And maybe you should be prepared, too.
