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Why Warren Buffett's record-breaking cash stockpile should have investors very worried Amp Price History
Warren Buffett's Berkshire Hathaway had $111 billion of cash on its balance sheet at the end of last quarter, the most in the company's history.
This is an ominous sign for the health of the market and suggests that Berkshire Hathaway views it as overvalued and overly expensive.
and his investing colleagues at Berkshire Hathaway have stayed on the sidelines.
that saw a record-breaking $2 trillion in deals through mid-May. But it also means
While that can be construed as good news for Buffett & Co. — since they have a veritable war chest of capital ready for deployment — it carries far starker implications for the overall market.
That's because Berkshire Hathaway's reluctance to buy anything can be viewed as a signal that just about
. And considering Buffett is one of the most successful investors in history, his market behavior should watched closely.
Berkshire Hathaway's cash balance has hit record levels as stock prices have done the same.
That said, it's not exactly breaking news that Buffett thinks few bargains exist. He
back in February, saying the lack of attractive pricing "proved a barrier to virtually all deals we reviewed in 2017."
Amp Price History , suggesting that an already tenuous situation has worsened.
Russ Mould, an investment director at AJ Bell, has taken notice. He's wary of the speculative deal fervor he sees accompanying record stock prices.
"M&A tends to peak when animal spirits are running high and often when executives feel their own shares are expensive enough to make them a valuable acquisition currency," Mould wrote in a client note. "Warren Buffett is still having difficulty in finding value in US — and perhaps global — stocks."
Mould points out — and indicates in the chart above — that Berkshire Hathaway's cash balance has been an effective proxy for market levels over history. As you can see, Buffett held comparatively high levels of cash in the periods preceding the two most recent market crashes, in 1999 and 2007.
So the question for investors now becomes whether to follow Buffett to the sideline or to stay invested in a market that is, by many measures, overextended. After all, So the question for investors now becomes whether to follow Buffett to the sideline or to stay invested in a market that is Amp Price History , the higher the likelihood they'll be left holding the bag when things go south.
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