Warren Buffett‘s actions. or at least those taken by his successors at Berkshire Hathaway, during this year’s market downturn sent a clear warning about the risks investors face at current stock prices.

When the S&P 500 dropped roughly 9% from its January highs, many investors assumed the pullback would be enough to lure the 95-year-old into the market.

Instead, Berkshire’s cash pile climbed to its highest level in the conglomerate’s history, and Buffett made his lack of interest clear in terms that left little room for interpretation.

“Three times since I’ve taken over Berkshire, it’s gone down more than 50%,” Buffett told CNBC, drawing a comparison between Berkshire’s three past 50% drawdowns and the current pullback. “This is nothing to make you get excited.”

Berkshire’s record $397 billion cash pile tells the full story

Berkshire Hathaway ended the first quarter of 2026 holding approximately $397 billion in cash, cash equivalents, and short-term Treasury bills, according to the company’s quarterly filing.

That figure climbed from $373 billion at the close of 2025, meaning Berkshire added roughly $24 billion to its liquid reserves in just three months as markets fell. 

The company also remained a net seller of stocks during the quarter, offloading $8.1 billion more in equities than it purchased, Bloomberg reported.

That position now exceeds the combined liquid reserves of Apple, Amazon, Alphabet, and Microsoft, sending a clear signal that Buffett sees no incentive to act at current valuations.

The valuation metric Buffett trusts most is flashing a warning

The S&P 500 trades at a forward price-to-earnings ratio of about 21, down from its recent peak as analysts raised earnings estimates, but it remains well above the long-run historical average of approximately 16, according to FactSet.

Buffett, however, pays closer attention to a different gauge entirely: the total market capitalization of United States equities divided by gross domestic product, a ratio commonly known as the Buffett Indicator.

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More Warren Buffett: That ratio currently stands at approximately 231%, its highest level on record, according to GuruFocus data. For perspective, Buffett has stated that a reading in the 70%-80% range is the kind of environment where “buying stocks is likely to work very well for you.” 

He has also warned that when the indicator approaches 200%, investors are “playing with fire.” Advisor Perspectives placed the indicator at 229.7% as of the latest gross domestic product estimate, roughly two standard deviations above the long-term trend.

That gap between the current reading and the zone Buffett considers attractive explains, in plain terms, why a 9% market dip failed to move his needle.

Buffett’s favorite valuation gauge has reached record highs, signaling stocks remain expensive despite the market’s recent pullback.

Greg Abel charts a different investment path with Alphabet

Bloomberg/Getty Images While Buffett chose to sit on the sidelines, his successor as Berkshire’s chief executive officer, Greg Abel, took a markedly different approach that is already leaving its mark on Berkshire’s investment portfolio.

Berkshire agreed in June to invest $10 billion in Alphabet through a private placement, purchasing $5 billion in Class A shares at roughly $352 per share and another $5 billion in Class C shares at about $348 per share.

That deal came on top of roughly $11 billion Abel had already steered into Alphabet during the first quarter.

I won’t make any [investments] that Greg thinks are wrong. … Greg gets the sheet every day

Berkshire has now committed about $26.6 billion in capital across its Alphabet purchases, and the stake is valued at approximately $32 billion at current market prices.

The purchase made Alphabet one of Berkshire’s four largest common-stock holdings alongside Apple, American Express, and Coca-Cola, a rapid ascent from no position at all just months earlier. 

Alphabet’s share offering was part of an $84.7 billion fundraise aimed at financing artificial-intelligence infrastructure, CNBC noted.

Berkshire’s first quarter under Abel by the numbers

Abel’s debut quarter running Berkshire produced strong operating results even as the company hoarded cash, with operating earnings of $11.35 billion, up nearly 18% from the same period a year earlier.

Net income more than doubled year over year to approximately $10.1 billion from $4.6 billion in the first quarter of 2025, CNN reported.

Abel also authorized $234 million in share repurchases during March, the first buyback activity Berkshire had conducted since May 2024, representing a small but symbolically significant signal of his willingness to return capital to shareholders.

Berkshire’s insurance and operating businesses are generating enormous cash flows, and leadership is choosing to let that cash earn just under 4% in short-term Treasury bills, with the 3-Month yield at 3.72% as of June 5.

Whether the market proves Buffett right or wrong over the next year, the message embedded in $397 billion sitting idle is difficult to ignore.

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