The World's Greatest Investor Is Making a Calculated Bet (His Plan To Profit)

Berkshire Hathaway is sitting on $397 billion in cash. It is the most that Warren Buffett's company has ever held. And when the greatest investor ever piles up that much cash and refuses to spend it, that might be the loudest warning the market can give you. So, let's talk about what all that money is really telling us. So, let's start with the number because it's almost impossible to even comprehend. Brookshire Hathway has 397.4 4 billion in cash all-time record. It has never been higher in the entire company's history. And to put it in plain terms, that pile of cash is equal to roughly 59% of everything the company could invest. So more than half of Birkshar's money is just sitting there in short-term treasuries. Birkshar's also been a net seller of stocks for 14 consecutive quarters, and the cash pile has continued to grow. Now, here's what makes this a bit strange for new viewers to understand. Birkshire Hathway is not a bank. It is a giant holding company that owns other businesses and also buy stocks. Think like Apple, Coca-Cola, big insurance companies, railroads, all kinds of things. Buffett's whole job, his entire life's work is taking money and putting it to work in great businesses that'll be around for decades to come. This is what he does. So, when a man like that lets cash pile up into the highest level ever instead of buying investments, it's like watching the world's best shopper walk through the entire mall and come out empty-handed. He doesn't want to sit on cash, but he is likely forced to for certain reasons. Additionally, there's a new person in charge now, a man named Greg Ael, who took over as CEO, and even under brand new leadership, the cash didn't get spent. actually grew up about $24 billion since Buffett stepped back and Greg took over. They're looking at the market and quietly saying the same thing. There's nothing worth buying right now. Now, guys, I know they've bought they made some investment in Google. They bought a home builder recently, but those were $10 billion of their $400 billion stockhold. You've got to also remember there's probably a lot of investments they think are worth it, but they would not move the needle. What I mean by that is if they bought the best investment ever, literally something that can make them 30% a year for 30 years and it was $100 million, even if they were right and it made 30% a year, it's not going to move the needle over the next 30 years. They need to deploy big amounts of cash into good investments. Not 30% return investments, but good investments. Guys, with this pile of cash, Birkshshire could buy every outstanding share of Netflix or Palunteer or McDonald's, Disney. Definitely Adobe, Home Depot. These are major companies they could literally stroke a check for and buy the entire company out. This isn't a little rainy day fund that's tucked away in a drawer. It is the single largest pile of cash ever assembled by one company in history. And the person in charge of it is choosing on purpose to sit on the sidelines. So why won't Greg buy? Why won't Buffett buy? Well, Buffett told us in plain and simple words in a recent interview. He said, and this is a quote, "We've never had people in a more gambling mood than we do right now." Let that sink in. This is a man who's been investing for over 70 years. He lived through the crashes, lived through, he actually was born right during the depression. He lived through 87 crash, dot bubble, financial crisis. And he's saying he's never ever seen people gambling with their money more than they are today. So, let me explain the difference between investing and gambling because it's the heart of this whole video. Investing is when you buy a piece of a real business because you understand it. You're paying a fair price or ideally a better price for what it's actually worth. Gambling is when you buy something just because the price is going up and you're hoping that it keeps going up. You're not really understanding what it's worth. You're just hoping that someday somebody will pay you more money for it. And guys, you can see this gambling mood everywhere right now. People are pouring money into stocks with no profits just because they're trending on X or they have the words artificial intelligence attached to them. This is exactly the kind of behavior that shows up near the top of every cycle when people forget that price and value are supposed to be connected. So, how expensive does Buffett and Greg think the market is? Well, there's a favorite tool that's actually been nicknamed the Buffett indicator. Here's how it works, and it's incredibly simple. And I want to remind everybody the best things in life especially in investing are simple. What this does is it takes the total value of the entire US stock market. Every publicly traded company add it together then compare it to the entire US economy in any given year. The GDP you're asking a question is the stock market price bigger than the economy that has that's there to support it. Now why does this make sense? Well guys think about it this way. It would make sense that if the US economy were to double in size, what should the value of the companies within it do? Probably double in size. It's a logical thing. So Warren Buffett said at any given moment, this is probably the single most reliable metric that we have. When that number is about equal where the stock total stock market value to G to GDP is about 1 one, the market economy that's considered roughly normal. Buffett himself has said the zone where he gets excited to buy, where stocks are actually cheap, is around 70 to 80% of that value. So where is it today, guys? It's 130% overvalued. Listen to that again. The market is priced more than two times the size of the entire economy. 130% overvalued isn't just high. It's higher than it was at the peak of the dot bubble in the year 2000 and way higher than right before the 2008 crash. Guys, after the year 2000, it took 12 years for the S&P to get a new high again. It took 16 years for the NASDAQ because the NASDAQ went and fell over 80% from its peak in 2000 to its bottom in 2002 or 2003. Now, I'm not telling you that a crash is coming tomorrow because a high reading can stay high for a long time. It has for a while. We've been over overvalued for many years. But it does tell you one single important thing. Buying today means paying some of the highest prices in history for $1 of American business. And Buffett built his fortune on refusing to do exactly that. So now the cash makes a lot of sense. He's not holding $397 billion because he's scared or because he's guessing a crash is coming next Tuesday. He's holding it because by the math he's trusted his whole life. There's almost nothing on sale that's at the size that it would be meaningful for Berkshire and he refuses to overpay ever. So guys, this is our stock market to GDP ratio. Now, this is the Buffing indicator, but my version is based on the S&P 500 because the S&P 500 is a market cap index. So, as it goes if it goes up 10%, it means the market cap went up. So, it's easy to sit there and apply it to the GDP. Now, here we are. This is the price of the S&P right now. 7542.46, guys. This is GDP and this is the ratio. This goes back a 100red years. We're 142% overvalued. It took the average of all this ratio and sat there and said, what does it look like? And the average, we're currently 142% above that. Let us look at that compared to history. Let's go to other big bubbles. We had 2000. Guys, here's the scary part. Our peak in 2000 was 47.18%. Repi repeat overpriced by 47%. We're 140% overvalued right now. And look what the next 10 years did after this overvaluation -2.6%. That's not including dividends, but even with dividends, that is a negative return. Let's go to 1982, which was an undervalued market. We were undervalued by 67%. What's that equivalent to today? Well, that'd be the equivalent of the S&P being at a,000 today. The S&P 500 index being at a thousand. It's at 7200 right now. That would be the equivalent. Isn't that incredible? Let's go to other Let's go to the time of the market when Buffett closest partnership saying there was nothing to buy out there. It was the late60s mid sorry 66 and um and 67. And look guys, they were 23% overvalued. Now, are there arguments why valuations should be higher today? Yes, and I buy into them and I get it. We have 100 years ago to even 60 years ago to make money you had to hire a lot of people, build factories. It was very capital intensive. That's not the case today. So, we should have higher valuations for that. Companies can get higher returns on capital. I understand it. But at the end of the day, guys, a dollar of profit is still a dollar of profit. And at a certain point, you've got to stop overpaying too much. Let's go back to the very start of this. Back to the late 20s. We got 208% overvalued. This is the highest in history back in September of 1929. Look what it did. Negative 9.5% a year for the next 10 years. That's crazy. Now let's go to the very top and talk about something that I think is very important because all these people are in denial about this like oh because we don't want to believe that stocks can be under could be overvalued but guys going back a 100red years 401 quarters 134 times the stock market in those in the 400 were undervalued by 30% or more. The future 10ear returns averaged 10.7 not including dividends. So with dividends based on history is closer to 13 or 14. And as we get to overvalued, look what happens to the returns. 10.7, 9, 2.1, -1.2, -2, -2.4. And the -2.4 is at 50% over valuation or worse, guys. We're at 141% right now. Now again, am I being this fear-monger putting up? No. I'm just sitting there saying be ready for what's going to come over the next 10 or 15 years. It's probably not going to be a good market, but you can still profit immensely from that. And I'll get to that in just a few minutes. Now, here's the part that really tells the story. After sitting still for a long time, Birkshshire did finally buy one thing that's important, but it wasn't Apple. It wasn't some hot new company. The one thing they decided was cheap enough to buy themselves. In March, Birkshar started buying back its own stock again for the first time in about 21 months. They had stopped for nearly two years. Let me explain what a buyback is in plain English. When a company buys back its own shares, it's using its own cash to purchase its own shares and take them off the market. That doesn't mean they're holding the stock as an investment for themselves. They're removing them from the market. What that does is it leaves fewer shares for everyone else. That means every share that's still out there becomes a little bit bigger piece of the company. Let me give the example. Let's say there's a company with 10 shares outstanding. If you own one of them, you own 10% of the business. Let's say they buy back two shares. Now there are eight shares outstanding. You still own one. That has not changed. But now instead of one out of 10 shares, you own one out of eight shares. So you went from 10% ownership to 12% ownership. It's a company's way of saying that we think our stock is a good deal right now. But I want to remind everybody, a lot of CEOs use this as a way to manipulate their stock. They're not buying back cheap shares. But not Birkshshire. When Birkshshire buys their shares back, they truly believe their shares are undervalued. The new CEO, Greg Ael, looked across the entire stock market, thousands of companies, and decided one of the single best places to put Birkshar's money was right back into Berkshire. When one of the only things a great investor will buy is his own company, he's quietly telling you that everything else looks too expensive. Now, I want to be fair and honest with you because this is important. Holding all that cash hasn't been free. It has cost Birkshshire a lot this year. Birkshshire stock is down about 3% so far in 2026, while the broad market, the S&P 500, is up about 8 and a half%. So while Buff Buffett and Abel have been patiently waiting, the rest of the market kept partying without them. That's a real cost in the short term. And guys, it's not just this year. It's been going on for several years now. But here's the other side and the whole point. The $397 billion in cash is the biggest pile of dry powder in history. Dry powder just means the money that is sitting there ready and waiting to be used to the moment a real opportunity shows up. When the market finally goes on sale, and guys, it will go on sale eventually, Buffett and Abel be the ones standing there with the fullest wallets on Earth, ready to buy great companies at fire sale prices while everyone else is panicking. The cash is both a drag today and the most powerful option in the entire market for tomorrow. And this is not just a theory. They have done this before and it made them legends. Back in the '08 financial crisis, while the whole world was terrified and selling everything at any price, Buffett used his cash to make huge, now famous deals with companies like Goldman Sachs and Bank of America. He bought boldly when everyone else is running for the exits and he made billions as those companies recovered. That's the pattern of his entire life. Hoard cash when everyone else is greedy, then spend it bravely when everyone else is fearful. Now guys, I want to remind you if you're new to our channel, don't take our titles literally. We are here to play the YouTube game. We put a title out there that gets your attention and then we teach a deeper, more meaningful story inside. And on top of that, guys, when we post the video to when you clicked on it, the title could have changed eight times. Now, here's the question I know a lot of you are asking because you've been leaving it in on the comments. If things are so expensive and there's so much bad news out there, prices still rising, stress in the credit system, crypto crashing, then why does the stock market keep going up and hitting new all-time highs? It feels completely disconnected from reality. And guys, I do not blame you for asking. It's the question I asked today. And the bad news isn't small stuff. Prices are still climbing. Inflation had two months of back-to-back 1.1% growth. Not for the year, for those two months. for the year, the last 12 months, it's at 4.2%. What this means is if your paycheck went up 4.2% over the last year, you're basically even because you're buying the same amount of stuff essentially with your paycheck and your paycheck keeps buying a little less every month if you're not getting that same increase. In addition, there are signs of stress in the credit system, which is a fancy way of saying more people and companies are starting to struggle to pay back what they've already borrowed. Crypto has had brutal crashes, wiping out fortunes in a matter of days. There's a war that's affecting the Middle East and the price of oil is drastically affecting everyone as that war in the Middle East continues. By almost any measure, the ground underneath the economy looks a little shaky and yet the market keeps setting records. Anyhow, that is the disconnect that everybody's asking about and it makes perfect sense to ask that question. You are not crazy for feeling that way. Here's a perfect example. Just recently, June 12th, the S&P jumped almost 2% a single day on hopes of a peace deal with Iran. Not an actual signed deal, just the hope of one. The market surge on the rumor, on words, on rhetoric. That is the gap between the story and the reality that Buffett is pointing at. And here's something that most people miss. When you hear the market hit a new high, it sounds like everything is going up. It's not, though. In May, the S&P 500 set several new records, but eight of its 11 sectors actually traded lower. The whole thing is being carried by technology, which jumped about 16%. So, the market isn't one big happy crowd all rising together. It's a handful of giant tech companies doing the heavy lifting, while most of the market is quietly struggling underneath. Even Morgan Stanley put it plainly, "The economy underneath this rally does not appear evenly strong." So why does that matter to you? Because when a few when just a few giant companies are holding up the entire market, the market becomes fragile. If even one or two of those big tech giants stumble, there isn't much underneath it to catch the fall. Now, does a disconnect like this mean a crash is coming tomorrow? No. And this is the most important thing to understand. Markets can stay disconnected from reality for a long, long time. Longer than feels possible. Look at history. Back in the 1970s during the oil embargo, the market was actually very strong. The crash didn't come during the bad news. It came about six months after the embargo ended. And think about 2008 while you're at it. When did 2008 crash, guys? The the under the underlying fundamentals were not great in ' 06, 07, even in '05. But it took until 2008 when all those fundamentals kind of came to the top and said, "Hey, we got a problem here." That's when the crash happened. That is the lesson hiding inside all of this. Price and reality can stay far apart for a long time. The market can ignore bad news for a very long time, months, even years. Which means trying to guess the exact day it all turns is a fool's game. Even Buffett says he cannot time it. So if you can't time it, what do you do instead? Well, here's what I want you to take away from this whole video, and it might be the most freeing idea in all of investing. You don't have to be buying something every single second. It is completely okay to hold cash and wait when nothing is cheap. So many new investors feel kind of pressure like their money isn't in the market every moment that they're doing something wrong. Now guys, does this mean stop dollar cost averaging a lowc cost ETFs? No. I still do that to this day and I'm going to continue doing that. Why? Because I have a long way in the future before I have to worry about pulling my money out. What is your situation? I don't know. You know best. But if you're far away from retirement, dollar cost averaging is the best way to deploy capital in a consistent basis, no matter what the market is doing. What I'm saying here is that the extra cash you have. If you want to buy individual stocks, it's okay if you're waiting for the right moment, the right times to buy the right companies. The right moment isn't a timing moment. It's buying the companies that you understand at a price that makes a lot of sense to you. But I want to remind you, if you buy something today and the market has a bad bare market, in all likelihood, it will go down further. That's why it's important for you to understand what you're buying. Because if it goes down further, you need to be okay saying the company is still doing what I think it's going to do from a fundamentals basis. I'm going to buy more. That is exactly what Buffett teaches us by example. He doesn't panic. He doesn't sell everything and hide. Yes, he's sold more, but he's just simply refusing to overpay. He keeps his standards high. He keeps his cash high and ready. And he waits patiently for a wonderful business to go on sale at a price that makes sense. That is not fear. That is discipline. And guys, whether you have 397 billion, 397 million, 397,000, or 39,000, it all comes down to being disciplined. Because guess what? Buffett started with a few thousand dollars. It comes back to the one idea that we talked about more than anything on this channel. Price is what you pay. Value is what you get. These are two very different things. I cannot express that any more importantly. A great company becomes a bad investment if you pay the wrong price. And a boring company becomes a wonderful investment if you buy it cheap enough. Guys, we did a video on SpaceX recently, and in it, we were talking about the valuation of $1.75 trillion. What's amazing is as we making the video, our CEO of Everything Money said to me, Paul, do you realize you could buy Birkshar Hathaway and Meta for the same price as SpaceX? And I was like, oh my gosh. Now, do I think SpaceX will grow faster than Birkshshire Hathway and Meta? I do. But I think Birkshshire and Meta at current prices is a far better long-term return than SpaceX at current valuations. Unless SpaceX goes above and beyond and does far better than even they think it will. The whole game is figuring out what is a business truly worth and then refusing to pay more than that. No matter how exciting the headlines are, no matter how fast everyone else seems to be getting rich. That's a very tough task. But remember, the goal with Buffett and Abel is to copy this discipline, not necessarily the cash pile that they're building. Here's what that looks like for a regular person. Keep that dollar cost averaging. Keep buying great businesses that you understand at a price that makes sense, but keep a little dry powder on the side. Now, I'm not asking you to take away from your process of buying lowcost ETFs to hit your retirement goals. This is for the extra money. If there was a time when stocks are extremely cheap, you're going to want to have that cash ready. Build a watch list of wonderful companies that you'd love to own, write down the price you'd be thrilled to pay for each one. Then, when fear finally takes over and the sale arrives, you're not going to be guessing in the chaos. And the great news is, guys, our software does exactly that for you. You use our community and our software to do the research. You use our stock analyzer tool to find out what's the right price for this business. And then once you find that price, you add it to the watch list. And guess what? The software will message you. The app will message you when that price is hit. That way, when the price hits, go in there, double checkck your numbers, and make a decision for yourself. Think about this like buying a house. Imagine you found a home you loved, but it was priced at double what it was actually worth. You wouldn't throw your entire life savings at it out of fear that prices might rise even more. You'd keep your money ready. You'd watch the market and you'd wait for a fair price or you'd find a different home at the right number to come along. Nobody would call that being scared. They'd call that being disciplined and smart. Waiting for the right price isn't missing out. It's refusing to overpay. And refusing to overpay is the single most powerful habit that a long-term investor can build. Now, here's the thing. Everything we just talked about, the the 397 billion in cash, the Buffett indicator at 230%, the gambling mood, it all comes down to one habit. Buffett always knows what something is worth before he looks at the price. I saw an example recently where he talked about a company in O2 and 03. Did he sit there and figured out what the company's worth? He said, "It's worth about hundred billion." Then he said, "I looked at the price and it was 35 billion." So this made sense. So when the price finally drops to meet the value or in that situation it was already well below the value, he does not hesitate. He did the math. That's discipline. And that's the reason most people can't copy it because most people lack patience. It's because they never did the math in the first place. So when the sale comes along, they're doing homework while they're scared. And scared math is bad math. The Everything Money Stock Analyzer is how you do the math. Now, while things are calm, you build your assumptions for a business. What's the revenue growth going to be? What are the margins going to be? What are the earnings going to be worth to you in the future, and it hands you a number, your own number, the price where that company becomes a deal by your own math, not the market's mood. You put that number on your watch list. You wait, and when the price comes down to earth and everything is on sale, you don't need to think too much. You open your list. In fact, like I said, we send you the alerts and you are ready to go make a decision. So, Buffett has his $400 billion in dry powder ready for that moment. Joining everything money now is how you build yours. The question I have for you is, what is it worth to be able to have that kind of confidence and be able to make decisions with the confidence that Buffett has? If the answer is a dollar a day, you're in luck. Click the link below. Sign up for our 7-day trial for $7. It'll be the best investment you make today. Now, Buffett's Cash isn't the only warning flashing right now. One of the biggest banks in the entire world just told its customers to be very careful, and the signals they're watching are lighting up red one after another. So, if you want to understand that warning and exactly what to do about it, click right here to watch our breakdown of Bank of America's market warning next. Thank you for your time.