Is Warren Buffett Predicting a Stock Market Crash?

There’s a lot of buzz going around lately about Warren Buffett's record-breaking cash pile. Some folks are whispering (or shouting) that it means Buffett is predicting a major stock market crash. I want to unpack what’s really going on here—and what it means for Rule #1 investors like you and me.

Buffett’s Cash Is Making Headlines… But What’s the Real Story?

Recently, Berkshire Hathaway reported it was holding around $348 billion in cash and treasuries—a record high. That’s 60% of Buffett’s publicly reported portfolio. In 2022, his cash holdings were at 28%. So, what gives?

Let’s be clear: this isn’t about market timing. Warren isn’t calling a crash. He’s doing what he’s always done—applying solid investing principles that align with Rule #1. When prices are sky-high, we don’t buy. In fact, we often sell.

Why So Much Cash? Buffett’s Not Guessing—He’s Waiting

Buffett’s recent comments at the 2024 Berkshire Hathaway shareholder meeting were very revealing:

“I don't mind at all under current conditions building the cash position.”

And let’s be honest—there's a lot going on in the world right now:

• Massive money printing globally

• High inflation

• Rising interest rates

• Global supply chain shifts

• Geopolitical tensions from China to Ukraine

In this kind of environment, Buffett isn’t rushing in. He’s sitting tight and waiting for wonderful businesses at wonderful prices. That’s Rule #1, plain and simple.

Buffett Isn’t Predicting—He’s Preparing

Let’s get one thing straight:

“Buffett isn’t predicting a crash—he’s preparing for opportunity.”

He’s following the timeless advice: “Be fearful when others are greedy.” And right now, the market is greedy.

• The S&P 500 is trading at 27x earnings, almost double the 140-year average.

• The Wilshire 5000 to GDP ratio is at a towering 177%.

• The Shiller P/E ratio is well above historical norms.

If this sounds familiar, it’s because these are the same conditions we saw in 1929 and 1999—right before massive market corrections. But again, this doesn’t mean Buffett is making a prediction. It means he’s seeing overvaluation and choosing to step aside until the odds are back in his favor.

Rule #1: Buy on Fear, Sell on Greed

Buffett’s recent sale of Apple and Bank of America isn’t about abandoning great companies. It’s about price.

In fact, Apple’s price went so high in 2024, it entered what I call the “sell me right now” zone. And when great businesses become massively overpriced, it’s time to lock in those gains.

As Rule #1 investors, we want to buy businesses at a margin of safety. If we can’t find that, we don’t buy. It’s that simple.

Buffett’s Biggest Limitation—And Why We Have an Advantage

Now, here’s a key point: Buffett doesn’t have the same flexibility that you and I do.

With over $348 billion to deploy, he’s limited to investing in companies with market caps over $100 billion just to move the needle. There are only about 100 companies in the U.S. that size. For the rest of us, that’s not a problem. We can go where the value is—even in smaller companies that still have strong moats, great leadership, and predictable futures.

So… Is a Crash Coming?

Maybe. Maybe not.

But that’s not the point.

Trying to time the market is a losing game. Instead, we do what Buffett does: build a watchlist, hold cash, and be ready to buy when prices fall.

Buffett said it best:

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it's imperative that we rush outdoors carrying wash tubs, not teaspoons.”

So the question is: Do you have your wash tub ready?

Take the Next Step Toward Investing Like Buffett

If you want to invest like Buffett, like Charlie, and like me—you need a strategy. That’s what we teach in our 3-day Rule #1 Investing Workshop. It’s affordable, it’s online, and it’s hands-down the best investing education you’ll ever get. Don’t take my word for it—our Net Promoter Score is 82, higher than Harvard or Yale MBA programs.

Reserve your spot and get your own Rule #1 plan in place—before the next golden downpour begins.