Legendary investor Warren Buffett is sitting on a record $334 billion in cash, but he hasn’t said why his cash position is so large.
Hedge fund manager Steve Cohen recently said that the Trump administration’s tariffs and large-scale budget cuts by Elon Musk’s Department of Government Efficiency could be bad for the economy and stock market.
When the best investor and one of the top traders in the world both appear cautious, maybe it’s time to pay attention.
In his annual letter to shareholders, Buffett has not offered any explicit reason for Berkshire Hathaway’s record cash hoard. But you don’t have to be storied financier Bernard Baruch to figure out that stashing cash is not the most bullish of signs.
Warning signs
The bear case has been made for some time now, as investors who previously urged caution pointed to a number of warning signs that are flashing in the market:
- Lofty valuations
- Deteriorating market breadth
- Highly concentrated returns in just a handful of mega-cap stocks
- Irrational exuberance over the promise of artificial intelligence
- Uncertainty over monetary and fiscal policies
- Worries about trade relations and geopolitical risk
- Looming issues around government funding
- Continued increases in federal deficits and the national debt
It’s a common saying that the stock market climbs a “wall of worry” and that overt pessimism is a contrary indicator.
But aside from Buffett and Cohen, individual investors and self-directed traders have been pouring money into equities at a relatively brisk pace of late. This suggests that the public is still quite bullish on the prospects for U.S. stocks.
Source: https://www.cnbc.com/2025/02/24/ron-insana-market-risks-are-rising-and-it-might-be-time-to-sell-the-rallies.html