Warren Buffett Always Said to Be Fearful When Others Are Greedy. With Investor Sentiment Surging, Is It Time to Worry?

Warren Buffett was the CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) until the end of 2025. He successfully navigated the markets for decades, building an investment record that earned him the nickname the Oracle of Omaha. His investment advice, while often folksy, is well worth listening to in both its direct and indirect forms.

One of the pillars of Buffett's investment approach was to be fearful when others are greedy. And greedy when others are fearful. He ended his tenure at Berkshire Hathaway in what could easily be described as a fearful mood. Here's what you need to know.

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Berkshire Hathaway has lots of cash, and that hasn't changed

When Buffett handed the reins of Berkshire Hathaway to Greg Abel at the end of 2025, he did so with $373 billion of cash on the balance sheet. Buffett, however, isn't gone; he's the board's president and continues to work with Abel on the investment side. At the end of the first quarter of 2026, the cash balance was up to $397 billion. Clearly, Buffett and his successor are having a difficult time finding investments worth buying.

It's clear that Buffett and Abel have some concerns about the market right now. And yet other investors don't seem to be worried at all. The S&P 500 index (SNPINDEX: ^GSPC) is hovering near all-time highs, and the so-called fear gauge, the CBOE S&P 500 Volatility Index or VIX, is trending along at a nominal level. And certainly nowhere near the levels seen during recessions and bear markets.

^VIX data by YCharts

What is Buffett seeing that investors aren't?

If you are a long-term value-oriented investor, like Buffett, the list of reasons to be worried right now is substantial. The S&P 500's lofty price and valuation suggest the market is richly valued. That in and of itself isn't so bad. However, multiple geopolitical conflicts are raging around the world. The conflict in the Middle East has pushed energy prices higher, raising the risk of a global recession. And less wealthy consumers are increasingly tightening their budgets, hinting that some are already feeling the pinch of higher prices.

In fact, in a somewhat unusual move, Abel and Buffett agreed that buying back stock was the best use of Berkshire Hathaway's cash at the moment. That's something that usually happens only when Berkshire Hathaway's stock is trading below its intrinsic value. Another sign that the market is, perhaps, in an irrational mood today.

Despite that worrying combination of headwinds, the market remains resilient. Buffett and now Abel have let cash pile up as uncertainty has increased. It seems very much like Berkshire Hathaway is positioned for a market storm. You might want to follow along and take some profits or hold off on investing new cash, letting your own cash pile grow.

Don't forget to be greedy

That said, it is important to remember both sides of Buffett's folksy wisdom here. Make a list of stocks you would like to own if only they were cheaper. That way, if the market does fall into a bear market, you'll be ready to be greedy when others are fearful. Buffett did that many times in his career at Berkshire Hathaway, and it often turned out very well for the company and its shareholders.

Right now, however, investor sentiment seems shockingly positive despite material uncertainty and lofty valuations. Long-term investors should probably tread with caution right now, as they prepare for a buying opportunity to open up when fear drives investors to sell stocks indiscriminately.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.