Warren Buffett Says the 2026 Pullback Wasn't Big Enough to Move Berkshire's Cash
Key Points
Warren Buffett did nothing with Berkshire Hathaway's cash pile to close out his tenure as CEO.
Buffett has said that it's a good entry point into stocks when the Buffett indicator is around 70% to 80%. It's currently at 230%.
His successor, Greg Abel, took a sizable position in Alphabet recently on Berkshire's behalf.
- 10 stocks we like better than Berkshire Hathaway ›
When the S&P 500 fell by 9% earlier this year, Warren Buffett didn't flinch. Many people assumed that, since stock prices had fallen, Buffett would take advantage of a few value opportunities.
He did not. In fact, the former chairman of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) didn't even seem particularly moved by the pullback.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
In an interview earlier this year, Buffett said of the U.S. stock market: "Three times since I've taken over Berkshire, it's gone down more than 50%. This is nothing."
Image source: The Motley Fool.
Buffett sees no value in U.S. stocks
The implication is clear. Stocks might have been lower than they were compared to their highs a couple of months earlier. But they were still very expensive on a long-term basis, and Buffett wasn't going to budge until stocks got much cheaper.
Berkshire ended first-quarter 2026 with nearly $400 billion in cash and Treasury bills on the books. To the average investor, this might be viewed as an unnecessary cash drag on a portfolio. But Buffett has consistently favored patience over emotion. When the time is right, he'll have the dry powder. Now, he says, is not the time to use it.
The S&P 500 is currently trading at a forward price-to-earnings (P/E) ratio of 21. That's down quite a bit from its peak, thanks to the big earnings boom the S&P 500 has enjoyed from artificial intelligence development. But that's not the metric that Buffett pays close attention to.
The Buffett indicator hits a new record
The Buffett indicator isn't called the Buffett indicator for nothing. This measure, which compares the value of corporate equities to U.S. gross domestic product, is the one he looks at. At around 230% currently, it's in unprecedented territory and clearly not the kind of level Buffett would be looking to buy at.
In the past, Buffett has said: "If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you." Unfortunately, it hasn't been there since the fallout from the financial crisis. He also said: "If the ratio approaches 200% as it did in 1999 and a part of 2000, you are playing with fire."
Understanding that, it's pretty easy to see why Buffett wasn't compelled to do anything with Berkshire Hathaway's cash. His successor, Greg Abel, has a different view. He's made significant purchases on Berkshire's behalf in Alphabet recently that put Berkshire much further into the AI ecosystem.
Warren Buffett isn't predicting a crash based on his comments or his lack of trading. But he is saying pretty clearly that there's not nearly the level of value in the market today that's compelling him to buy.
Should you buy stock in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,191!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,258,838!*
Now, it’s worth noting Stock Advisor’s total average return is 941% — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of June 8, 2026.
David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Recommended Articles
