Warren Buffett’s $400 Billion Is Going Nowhere for Now: Here’s Why Berkshire Hathaway Is My Top Pick for the Next 20 Years Quick Read – Warren Buffett’s indicator sits at 230%, keeping Berkshire’s $397 billion cash pile in T-bills until a real market correction arrives. – BRK-B…
sumed buybacks after a 21-month pause when its price-to-book ratio dropped to 1.4, signaling management views the stock as undervalued. – Greg Abel invested $15 million in Berkshire shares and committed to annual purchases. That sum represented roughly his entire after-tax annual salary. – Recently, Warren Buffett said that the almost 10% pullback we saw in February was not big enough to get Berkshire Hathaway (NYSE: BRK-B) excited
He pointed out that he has seen the stock market down 50% three times in his career, so a small pullback like we saw this year was nowhere near enough to create the opportunities needed to justify using some of the gigantic cash pile that Berkshire Hathaway has stuffed into Treasury T-bills. The Buffett indicator, the metric most important for justifying stock purchases at Berkshire Hathaway, compares the value of corporate equities to gross domestic product. At a whopping 230%, it is nowhere near the 70% to 80% range that Buffett has noted in the past is a solid level for buying stocks.
He has also pointed out that investors are playing with fire at or above the 200% level, as was the case in 1999 and 2000. The gigantic rally over the past five years, from June 2021 to today, is impressive. The S&P 500 is up a stunning 75%, including years with massive selloffs, like 2022.