Warren Buffett Is Holding On to Cash — Should You?
Written by
Chris Adam
Edited by
Caitlyn Moorhead
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Should you be holding on to cash? It’s a question many consumers have been asking recently thanks to the world’s most famous investor, Warren Buffett.
Buffett’s conglomerate, Berkshire Hathaway, has a huge cash pile amid its stock-selling spree. But just because the renowned financial guru doesn’t necessarily subscribe to timing the market and is holding on to cash, it doesn’t necessarily mean everyone should be doing the same.
Here’s a look at some reasons why Buffett is making those moves with cash and stocks, and some things to consider for your own cash position and long-term investment portfolio.
Buffett’s Buffet of Cash
Buffett has been selling stocks so much that the Berkshire Hathaway cash balance reached record levels — $300 billion last year. He’s notorious for beating the S&P 500 index’s annual return by a pretty wide margin, so it’s an interesting move from an observer’s perspective.
Amid fears of a recession, it’s helpful to note that Buffett doesn’t sell due to economic conditions or predictions. He has drawn attention, though, for selling off shares of big companies like Apple and Bank of America. Instead of loading up on new companies, Berkshire Hathaway is holding onto billions in cash. Though Berkshire has added some other big names to its portfolio, for the most part, the company is not really buying up shares of other stocks.
Maybe this is a sign that Buffett isn’t seeing any substantial buying opportunities, or perhaps because valuations have become too inflated. Either way, the time horizon of what investments or asset classes could outperform cash can be tricky to navigate, especially for those who are retirement planning.
Buffett’s cautious approach aligns with a previous year of strong stock market performance driven by optimism about a smooth economic recovery, easing inflation and potential interest rate cuts by the Federal Reserve. However, recent trends, such as the 10-year Treasury yield surpassing 4% at the beginning of 2025, suggest interest rates have not consistently followed expectations.
Other well-known investors have expressed concerns about the rising fiscal deficit. Buffett hinted he sold some stock holdings, thinking that tax rates on capital gains would be increased to help with the growing deficit. Anytime there is this amount of political and economic volatility, it may be a good idea to see what the money experts are doing with their funds.
Your Cash and Options
For your own financial picture, how much sense does it make to hold on to cash? The answer may greatly depend on your finances and your goals.
You may see cash as a safer option than things such as stocks or bonds. The stock market has big ups and downs, which can hurt your cash if you’re thinking in short-term options.
However, according to J.P. Morgan, “Cash comes with an opportunity cost – by sitting in cash, investors may miss out on the potential upside stocks could see in a soft landing, lack the protection that bonds can offer if a recession does happen, and lose out on the inflation protection that real assets have.”
Experts at J.P. Morgan suggest you take a step back and look at your overall financial picture. You can think about how much liquidity you need. You can also review your money goals. If you determine you have excess capital in cash and cash equivalents, you could look at many options from low risk to high risk to see what may give you higher returns as a long-term investor.
Caitlyn Moorhead contributed to the reporting for this article.
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