Warren Buffett: "DO NOT Buy Stocks Right Now!" (LAST WARNING)

Warren Buffett just did something that he has not done in decades. And every time he's done it before, a market storm has followed. Many investors believe that Warren Buffett is quietly sending a warning and his latest moves are fueling serious speculation. As of the first quarter of this year, 2025, Berkshire Hathaway's cash pile hit a record breaking 347.7 billion dollars. That is more than double the 167 billion from just over a year ago. But guys, it's not about the size of the cash. It's the pattern behind it. Buffett has now been a net seller of stocks for nine consecutive quarters, reducing positions in companies like Apple and Bank of America. Stocks that he has always championed. To seasoned investors, this isn't just caution. It's a signal. The combination of record cash holdings and sustained stock selling leads some to believe that Buffett is preparing for a significant market correction. Now, while he hasn't explicitly predicted a crash, his investment behavior is interpreted by many as a signal of caution regarding current market conditions. Buffett has sat on large amounts of cash in the past, and it's happened right before major market downturns. Let's rewind back to 1999 before the dotcom bubble burst. Berkshire at that time held approximately 15.5 billion dollars. Now, you might sit there and say 15 and a half billion. That's nothing compared to 367. Yeah, but Berkshire was a much smaller company back then. Today, the stock price is over 800000. Back then, it was the 30000 range. It is 25 times larger. This represented a significant portion of the company's asset at that time. Buffett was criticized, called a dinosaur, because he avoided the speculative tech frenzy entirely. Famously saying that he did not understand the sector. Now, I want you guys remember what he means by that. He doesn't sit there and say, I don't understand because I don't understand how a computer works in my buying it. No. What he was saying was and what he always says is, if I can't accurately predict how much money the company will make in 10, 20, 30 years, I avoid it. It's the too hard pile. And back then, tech was so brand new and dotcoms were not making any money. So he's like, I don't know how to say this one's going to make this. This will make that. He kept a lot of cash on hand. And as tech collapsed, his patience paid off with minimal losses. Now, fast forward to early 2008, just before the financial crisis intensified, Berkshire's cash reserves at that point had tripled to forty four point three billion dollars. These substantial cash positions allowed Buffett and Berkshire to capitalize on investment opportunities during subsequent market downturns, such as his notable investment in Goldman Sachs and other companies during the crisis. He literally talked about how he would be in the bathtub and thinking, how can I provide more belief in these in these banks and in the economy and make money off that? Today, his behavior is becoming eerily familiar. He has parked over 56 percent of Berkshire's portfolio into cash, earning four and a half percent in short term treasuries. Given his track record, many fear that he's seeing what others are. And when Buffett holds back like this, historically, a market storm hasn't been far behind. Now, a lot of people might sit there and say, well, he's been building this position for a while. That is true. But he's also said even Munger when he was alive and he passed away over a year and a half ago, two, three years ago. Munger famously said that this is the hardest market he's ever been involved Imagine a 97 or 98 year old who's been investing for decades upon decades, saying this is the hardest market he's ever been involved with. These are the last 12 quarters of Berkshire Hathaway, guys. It's actually ten quarters of selling. Why would he sell like this? Why would a guy who says that he likes to own things forever sell? This is all the information right here. This is not made up stuff. This is directly from Berkshire. Now, let's see what Buffett had to say at the 2025 Berkshire Hathaway meeting about holding $347 billion in cash. We came pretty close to spending $10 billion. Not that long ago, for example. We'd spend $100 billion. I mean, and those decisions are not tough to make. When, when something is offered that is, that makes sense to us and that we understand and offers good value and where we don't worry about losing. And the one problem with the investment business is that things don't come along in an orderly fashion and they never will. I mean, it isn't like every day, uh, you know, the long-term record is sensational, but that is not a product. And I've been in, let's see, I've had 200 trading days times 80 years. I'm 16 million trading days. And we kind of, uh, uh, I mean, 16,000 trading days, it would be nice if every day you got four opportunities or something like that. And, you know, and they were expected to be equally attractive. You know, if I, if I was running a numbers racket, you know, every day would have the same expectancy of that. I would keep 40% of whatever the handle was. And so the only question would be is how much we've transacted, but we're not running that kind of a business. And so we're running a business, which is very, very, very opportunistic. And, uh, Charlie always thought I did too many things. Uh, he thought if we did about five things in our lifetime, we, we could, we could, uh, we'd end up doing better than if we did 50 and, and, uh, and that we never concentrated enough. Uh, so that we would rather have, if we've got 335 billion now in treasuries, we would rather have conditions that have developed where we would have like 50 billion or something like that. But that, that just isn't the way the business works. And we have made a lot of money by not wanting to be fully invested at all times. And, uh, um, we don't think it's improper actually for people who are passive investors just to make a few simple investments and sit with their life, sit for their life. And, um, but we've made the decision to be in the business. So, uh, we think we can do a little better than that by behaving in a very irregular manner. Now guys, what's interesting is this is Berkshire Hathaway's cash position. Here's what's incredible as the cash is up late nineties and in 2000 early 2000s cash pile goes down. Why? Because he buys more after the crash, leading up to the financial crisis, lots of cash during financial crisis, a lot less cash right here after COVID building up cash during that 2022 bear market, buying some stocks, cash goes down. Is this coincidence? In his annual letter, he mentioned seeing nothing compelling to buy, indicating a preference to wait for more favorable conditions. This strategy echoes his approach during previous market bubbles where he increased cast positions and anticipation of downturns. Warren Buffett isn't holding almost 350 billion dollars in cash because he's scared of a crash. He's holding it because he thinks the market's overvalued, plain and simple. He doesn't see anything substantial to buy. That's the Buffett way. He has never been one to throw money into overpriced assets just to chase returns. He waits and he waits. Remember when everybody was telling us that Cathie wood was so much better than Warren Buffett and Warren Buffett was a dinosaur. How's Warren Buffett looking now? Buffett strikes when value is there. We saw it in 99 Buffett warned of low returns ahead when everyone was euphoric. He stayed in cash.com bubble burst. His patience was rewarded. Same story in 07 44 billion in cash. Then he spent $20 billion during the financial crisis on distressed but fundamentally strong businesses. Fast forward to now, stocks are very richly priced. The market cap to GDP ratio, Buffett's favorite indicator. In fact, it's called the Buffett indicator is over a hundred percent above historical norms. Guys, during the.com level, we were at 55%. He's at over, we're at over a hundred percent currently. Now remember, the company is very large. Berkshire is very large with $350 billion in cash. He can only buy big things, but the thing is the max seven are all big companies. The current magnificent seven is over $16 trillion guys with 350 billion. He could buy 2% of the mag seven. Why doesn't he? Because they're expensive. This would do nothing to the magnificent seven stock. So all he's saying, he needs to be, he needs to find big elephants that he can shoot. He's got seven great ones. According to the markets, everybody says they're the best stocks out there. Why is he not buying them? He doesn't see value. My company, let's say it's worth $20 million. I don't know what it's, I really have no clue what it's worth. If I offered to sell it to him for 10 million, he would laugh at me. He'd be like, great, big deal. It's not going to move the needle. You can't invest 10 million. Even if he invested 10 million into our company and made 30% returns for 30 years, it wouldn't make a dent. That's why he's got to go for the big companies. But the S and P 500 is all big companies. And let's not forget, at the time of the last quarterly report from Berkshire, they're earning four and a half percent on short-term treasuries. That's $16 billion a year in interest income. So instead of chasing stretched valuation, Buffett is doing what he always does. He waits for the pitches. He talks about this all the time. He's a batter at the plate and he has unlimited pitches. How amazing is that? And when prices drop and fear sets in, he will be ready with one of the largest war chests in financial history. Today's stock market isn't just expensive. It is far more overvalued than it was during the dot-com bubble. And in fact, the only time I see it going back where it was more of a value than this was the great depression right before then Warren Buffett's go-to metric is that stock market GDP ratio. I created my own version here, which I'll get to in two seconds. I made mine based on the S and P 500. And historically this basically means the S and P 500 sells for about full value of us GDP. Great. Where are we today? Guys? We're over 200% the value of the GDP, meaning that investors are paying double the economic output for stocks than they would have in the past. Now, there's also the 10 year cyclically adjusted PE ratio. What that does is if you're out there saying, Paul, it doesn't matter about stock values. We're international. It doesn't include about fine, but the 10 year earnings doesn't care where the money's earned us internationally. It just takes it all from the last 10 years, normalizes it's today's dollars using inflation and compares it. Historically, we were at 17.74 today. We're at 38.35, 116% overvalued. Now over time, you will see here, guys, that the trend line is increasing on a 10 year PE. I get it. And I always say this a hundred years ago, if you wanted to, if you wanted to make money, you had to build a factory. You had to spend all this money to do it. Nowadays Instagram was sold for a billion dollars, like 20 employees or something crazy like that. So I do think there is a justification for higher valuations today, but how much higher that's the question. Because remember the fifth and most important tenant of our principle driven investing is a great story can become bad investment. If you pay the wrong price and our us economy story is better than it was a hundred years ago, new company stories are better than they were a hundred years ago. But if you pay the wrong price, you will make a bad investment. So what does it all mean? Well, it means we're starting from a dangerously high valuation today. And historically, when you start from a hive, even not even historically, logically, the more you pay for a stream of income, the lesser returns are going to make. If I were to say to you, Hey, I'm going to pay you $10 a year for the rest of your life. If you pay me a million dollars for that opportunity, you're going to lose a lot of money. If you pay me $1 for that opportunity, you're going to make a ton of money. The exact same future cashflow, the wrong price changes the returns significantly. Now, remember, we're not predicting crashes, but the odds of earning over 5% annually over the next decade based on these valuations seem slim. Is it impossible? No. How would it have to happen? Well, the same thing that happened in the last five or six years, massive inflation. That's how we get out of this mess. So you got to pick your poison. Do you want inflation or do you want stocks to normalize in price? Remember guys, we don't know the future. And I don't know where stocks are going to go in the next 10 years. However, if you give me these valuations at every point in history, I'm going to say it's not very likely that the next 10 years are going to be as good as the previous 10. Now, it doesn't mean there isn't value to be made out there. In fact, the difference between large cap and value stock valuations has, it's the highest level it's ever been. That means there's a lot of value in smaller companies today, deploying them kind of money that Berkshire has over $340 billion sounds powerful until you realize how hard it actually is to earn a meaningful return on that kind of money. And that's why Buffett is being very cautious, but also why you need to take note because the companies that he needs to buy are the companies that are absolutely massively overpriced right now. That's why he's not buying them. As I told you before about my company, if you were to buy my company today for half its value, you would absolutely crush it. And you would feel that for the rest of the time, how well you did. If Buffett bought my company today for a million dollars, a 95% discount of what I said before, he's going to be like, great. I didn't notice it at all. Buffett has said many, many times, if he had $1 million to invest, he guarantees he can make 50% returns a year. Why? Because there are countless, small, undervalued market cap businesses for Berkshire though, they need bigger. And right now, these valuations we're talking about are based on big companies. If he's not pulling the trigger on big companies, it means he is being cautious here for a reason valuation. He is not timing the market. He's just waiting for the right opportunity. He's not chasing returns. He's waiting for value. But for you out there, you're hearing this going, well, then I shouldn't buy. No, it's different. If Berkshire made 0% returns for the next 50 years, it would still be one of the largest companies in the world. If you make 0% returns the next 50 years, you will not be able to retire. That's the difference. Instead of trying to time these things, what we tell you to do every single time is the market's going to do this in your lifetime value-wise, but the price is going to do this. Yes, we might be here. Maybe if your dollar cost average, you're going to overpay and you're going to underpay, but guess what you're going to do over long periods of time. You're going to do this. And I challenge you to do one thing. When we are in this level based on valuations, increase how much you save. That's how you can beat the market and get this kind of return. It's a novel idea and it's hard to do because in order for that to happen, the story has to be bad. You're not managing billions of dollars. You're not trying to move the needle on a trillion dollar portfolio of companies. That's a good thing. It means you can do what actually works. You can consistently invest in low cost index funds through dollar cost averaging. I'm not Warren Buffett, but I have a thousand apartments upstairs. I have seven or eight businesses upstairs. I can generate returns above and beyond my cash. In fact, of my net worth as of right now, because I've bought several properties, about 24% is allocated to cash inequities. That's it. So even if I make 4% return on this for a long time, if my other 75, 76% is in cat in real estate and businesses and they're making 12 to 15%, I'm going to do okay. But that is not most people's situation. I'm in a unique spot and I don't say that to brag. I say it to say dollar cost average, just keep buying week after week, month after month, quarter after quarter, regardless of the market is doing. It might not feel exciting, but it works. And over time the S and P 500 has delivered strong inflation beating returns, especially when investors stay disciplined through volatility. You will make more money as everybody else is fearful. That's it. No tricks, no gimmicks, no sitting in cash waiting for the perfect moment. So if you're not investing consistently today, do yourself a favor. Start now use a low cost ETF like VOO SPY automate those contributions, let time and compounding do the work. Simple beats clever every single time. Now with all this said, guys, we love buying individual stocks. And if you'd like the idea of doing it, I highly encourage it on one condition. Make sure that you're setting up your future on low cost ETFs to hit all your goals, extra money, then go in there and do that by individual stocks with the right process. Once you've learned a few things, how do you figure out? Let me show you. This is our, obviously our software and we have our retirement calculator up here. Use our retirement calculator, figure out how much you need to save in low cost ETFs to be able to retire when you want to retire with how much money you want to retire. After you have that number and you start dollar cost averaging, then every extra dollar put in a separate brokerage account that you control, learn a process, watch this channel, watch other channels, get an idea of what works for you. We have a principle driven approach to investing. If the market crashes tomorrow, continue dollar cost averaging, but be ready to buy individual companies that have come out of favor. Good fundamentally driven companies. That's what we want. And that's part of the principle driven investing process. Now you've heard me mention principle driven investing. If you want to learn more about it, I think everybody should learn about it no matter what you invest in. It's a good way of thinking. Click the link below. We will email you our PDF, our free PDF on principle driven investing in a matter of one minute. And I really encourage you to keep it and read it over and over again. Guys, I'm the one that created it and I still read it over and over again. It is literally on my desk and in front of me right now. So even though Warren Buffett isn't saying buy stocks right now, he did reveal major concern for what he believes will happen in the stock market over the next decade and what you should do right now to protect and grow your portfolio. He is not shouting. He's one of the most eloquent speakers ever. He never shouts, but if you know how to listen, the message is loud and clear. So click the video linked on your screen where we break down that powerful warning about the next decade that Buffett just delivered. Thank you for your time.