Warren Buffet is known as one of the best investors in history. He’s famous for patiently buying and holding stocks, without worrying about market timing. He is, however, also known for his ability to hold cash in periods where he cannot find value in stocks, due to high valuations. If you take a look at the chart below, you will see the cash and cash equivalents of Berkshire Hathaway, his investment partnership. He has now around $320Bn in cash. That is 5.4% of all outstanding US Treasury bills. If actions indeed speak louder than words, Mr Buffett is shouting this market is expensive! We don’t know how long would it take for valuations to ease, as this pile of cash has been building up for a while, but it’s a good indicator from someone with an excellent track record that put his money where his mouth is. Consider yourself warned.
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