Berkshire $277B Cash: Impressive but not unprecedented

The cash-to-market cap ratio of 30% isn’t too far from where it’s been historically, hovering just 3% above the average and 5% above the median since 2000. The last time we saw this level was around covid period and before that, 2015 and even higher in 2012 and 2013

So, what’s the takeaway? Sure, $277 billion is a massive number, but when you compare it to the overall size of Berkshire, it’s more of a “steady as she goes” approach rather than a signal of impending doom.

For what it's worth, I believe Buffett is indeed concerned about current valuations, and the sheer size of Berkshire makes it tough to find meaningful opportunities right now in the places that are cheaper. But I also think there’s an underlying consideration of what happens when the Oracle eventually steps back for good, whether by choice or, heaven forbid, something unforeseen. It’s easy to overlook that he’s 93, and if anything were to happen, the stock would likely face significant pressure. A substantial cash reserve would be a strong buffer against any overreaction. Just my two cents. Plus, they’re earning 5% while they wait. Jury out how long that lasts