When to Exit at the Top? Berkshire's Cash Pile Hits Record $397 Billion as U.S. Stock Valuations Reach Historic Highs

BlockBeats News, May 2nd - In the first quarter with Greg Abel as CEO, Berkshire Hathaway's cash reserves surged to a record high of $397 billion. At the end of last year, the company's cash reserves saw a slight decrease, but in the first quarter, they increased significantly as a net $8.1 billion of stocks were sold during the period.

Furthermore, Berkshire Hathaway A (BRK.A.N) reported $936.75 billion in revenue for Q1 2026, compared to $897.25 billion in the same period last year, beating market expectations of $892.74 billion; net profit was $10.106 billion, up from $46.03 billion in the same period last year, but slightly below the market's expectation of $11.762 billion. Berkshire Hathaway's fixed-income securities' fair value investments at the end of Q1 2026 reached $17.669 billion, slightly down from $17.816 billion in the same period last year.

Buffett has always viewed cash as a "necessary but not ideal asset," often likening it to oxygen - crucial for a business but not a good investment in itself. Buffett has repeatedly emphasized that Berkshire will never favor holding cash equivalents over great businesses and that cash is only a war chest waiting for a "superb opportunity." When the market is overvalued and lacks attractive investment targets, he prefers to hoard cash rather than make forced investments; but when a great opportunity arises, he will not hesitate to deploy this ammunition. In Buffett's view, cash can provide safe returns in a high-interest-rate environment, but in the long run, investing in excellent businesses is far more valuable.

While Berkshire's cash holdings reach a new high, despite the S&P 500 and Nasdaq hitting new all-time highs recently, there are still multiple hidden risks behind the market, with valuations at historically high levels. Data shows that as of April, the S&P 500's trailing price-to-earnings ratio is around 24 times (historical average is around 16 times), while the Shiller PE ratio (cyclically adjusted) has risen to over 37 times, at historically extreme levels, second only to the dot-com bubble era. This "valuation + high expectations" combination means the market has very limited room for error. Moreover, the current U.S. stock market rally is based on optimistic assumptions such as "AI-driven earnings, falling inflation, declining interest rates, and manageable risks," and any deviation in any variable could trigger a market-wide shock.