What does it actually mean when people say Warren Buffett is hoarding cash?

I don’t feel great about where the economy is headed right now. I think a big market correction might be coming. Most of my retirement is in VTI/VXUS (80/20), but I really don’t want to see it tank like in 2008.

When people talk about “stockpiling cash,” what does that actually mean? Are they selling stocks and just holding onto cash? Or are they putting money into safer things like bonds?

When people say Buffett is hoarding cash, they’re talking about Berkshire Hathaway. The company generates a ton of money from its businesses, and right now, Buffett isn’t investing as much of it.

If you’re running a massive company like Berkshire, it makes sense. For regular folks, it’s not usually a good idea to try and time the market like that.

@Nico
Exactly. For those of us with 401(k)s or IRAs, trying to copy Buffett is pointless. Stick with your plan and ride out the ups and downs.

How close are you to retirement? If it’s still decades away, trying to time the market by pulling out now could hurt you long-term. You might miss out on the recovery and growth.

Noor said:
How close are you to retirement? If it’s still decades away, trying to time the market by pulling out now could hurt you long-term. You might miss out on the recovery and growth.

I get that. I wouldn’t pull everything out, but I’ve been thinking about reducing my exposure a little.

@Vero
You’re getting downvoted because most people on these forums are in their 20s or 30s and don’t get that you can’t stay fully in stocks forever.

Reducing exposure as you get closer to retirement is totally fine, especially if it helps you sleep at night. The market isn’t cheap right now, which is probably why Buffett’s holding some cash.

@Hal
Yeah, if you’re near retirement, it makes sense to dial back risk a bit. Everyone’s situation is different, though.

@Hal
But where did OP say they were close to retirement? Following Buffett’s moves doesn’t make sense for most people anyway. His situation is so different from ours.

Ashwin said:
@Hal
But where did OP say they were close to retirement? Following Buffett’s moves doesn’t make sense for most people anyway. His situation is so different from ours.

Right? Buffett plays a completely different game. We’re out here worrying about our 401(k)s, and he’s deciding whether to buy whole companies.

@Vero
If you were near retirement in 1929 or 1999 and the market crashed, it could take years, even decades, to recover. This is why many recommend rebalancing your portfolio as you get closer to retirement. Having some bonds or dividend stocks for income can help weather downturns.

Noor said:
How close are you to retirement? If it’s still decades away, trying to time the market by pulling out now could hurt you long-term. You might miss out on the recovery and growth.

Buffett’s just sitting on cash like a dragon on a pile of gold.

If you like what Buffett’s doing, you could just invest in Berkshire Hathaway (BRK).

Teo said:
If you like what Buffett’s doing, you could just invest in Berkshire Hathaway (BRK).

I agree. That reminds me, I need to re-balance my portfolio and add more BRK.

Teo said:
If you like what Buffett’s doing, you could just invest in Berkshire Hathaway (BRK).

But as Buffett says, you can buy a great company at a bad price. If Berkshire is overvalued, investing there won’t help you much.

When Buffett stockpiles cash, he’s selling some stocks and putting that money into short-term bonds or treasury bills. If you think he’s right, you could move a chunk of your VTI/VXUS into something safer like a cash-equivalent fund. But think carefully before doing that.

@Fife
That’s not great advice. Buffett doesn’t own VTI or VXUS, so why would your takeaway be to sell those? You also don’t know why he’s holding cash, and you can’t use it the same way he can.

@Fife
Even if Buffett is right, copying him doesn’t make sense. He’s hoarding cash to buy companies, not to fund his retirement like the rest of us.

You seem worried about another 2008. If that’s the case, why are you 100% in stocks?

Poe said:
You seem worried about another 2008. If that’s the case, why are you 100% in stocks?

Good question. That’s what I’m asking—what else should I be investing in?

Vero said:

Poe said:
You seem worried about another 2008. If that’s the case, why are you 100% in stocks?

Good question. That’s what I’m asking—what else should I be investing in?

If you want less risk, consider a portfolio with a mix of stocks, bonds, and maybe some cash. Check out the ‘Golden Butterfly’ portfolio—it’s designed to reduce volatility. Or go for a basic three-fund portfolio and adjust the bond allocation to your comfort level.