Berkshire's $397B Bet Against an Overheated Market

Berkshire Hathaway has accumulated a record $397.4 billion in cash and Treasury bills—59% of its investable portfolio—after fourteen consecutive quarters of net equity selling under new CEO Greg Abel, signaling the company's cautious stance on an overheated market. Multiple valuation metrics support this defensive position: the Buffett Indicator has hit a record 232% (well above the historical 120% overvaluation threshold), and the Shiller P/E ratio recently reached 41.33%, only the second time since 1929 it has breached 40%. While Berkshire continues selective investments in companies like Apple and Alphabet, its underperformance relative to the Magnificent 7 tech stocks and pressures on its core insurance business suggest the company is prioritizing dry powder for potential opportunities in a market correction.