Berkshire’s $380 Billion Lesson: Why Patience Matters More Than Prediction

Berkshire Hathaway is one of the most unusual companies in the world. It owns insurance businesses, railroads, energy assets, manufacturers, retailers, and large investments in public companies. For many decades, Warren Buffett used Berkshire as a machine for moving money from lower-return opportunities into higher-return opportunities.

So when Berkshire holds a very large amount of cash instead of buying aggressively, investors should pay attention.

But we must be careful. A large cash pile does not automatically mean “a crash is coming tomorrow”. The cleaner interpretation is this: Berkshire is saying that prices are not attractive enough, risk is not being paid enough, and patience has value.

That is a much more useful lesson than trying to predict the next crash.

The real number: about \$380 billion, not just \$397 billion

At the end of the first quarter of 2026, Berkshire reported \$51.478 billion of cash and cash equivalents in its insurance and other businesses, \$339.261 billion of short-term United States Treasury bills, and \$6.644 billion of cash in its railroad, utilities, and energy businesses. Add those together:

\[\$51.478\text{ billion} + \$339.261\text{ billion} + \$6.644\text{ billion} = \$397.383\text{ billion}\]

Rounded, that is about \$397.4 billion.

But there is an important accounting detail. Berkshire also had \$17.229 billion payable for Treasury bill purchases that had not yet settled at the quarter end. In plain English, Berkshire had bought some Treasury bills just before the reporting date, but the cash payment happened shortly after the reporting date. So the better “net” figure is:

\[\$397.383\text{ billion} - \$17.229\text{ billion} = \$380.154\text{ billion}\]

Rounded, that is about \$380.2 billion. Berkshire’s own quarterly filing shows the cash, Treasury bills, unsettled Treasury purchases, and total assets figures used in this calculation. (1)

Treasury bills are short-term loans to the United States government. They are treated as very safe and very liquid. Liquid means they can be turned into cash quickly. So when people say Berkshire has a “cash pile”, they usually mean cash plus Treasury bills.

Why the cash pile is so important

Berkshire had total assets of \$1.252 trillion at the end of the first quarter of 2026. We can calculate the cash-and-Treasury-bill weight like this:

\[\frac{\text{net cash and Treasury bills}}{\text{total assets}} = \text{cash weight}\] \[\$380.154\text{ billion} \div \$1{,}252.271\text{ billion} = 0.3036\] \[0.3036 \times 100 = 30.36\%\]

So roughly 30% of Berkshire’s total assets were sitting in cash and Treasury bills.

That is not normal behaviour for a company whose main skill is buying businesses and securities. It tells us Berkshire is not finding enough attractive opportunities at today’s prices.

But this is not laziness. It is discipline.

Cash has a hidden value. It gives Berkshire the ability to act when other people cannot. When markets panic, many investors are forced to sell. Berkshire, with hundreds of billions of liquid money, can become the buyer.

That is what patience means in investing. It is not doing nothing. It is waiting until the expected reward is high enough.

Berkshire is still buying, but it is selling more than it buys

One mistake people often make is saying Berkshire has “stopped buying”. That is not accurate.

In the first quarter of 2026, Berkshire bought \$15.938 billion of equity securities. Equity securities means shares in companies. During the same quarter, it sold \$24.087 billion of equity securities. (1)

The calculation is:

\[\text{shares sold} - \text{shares bought} = \text{net selling}\] \[\$24.087\text{ billion} - \$15.938\text{ billion} = \$8.149\text{ billion}\]

So Berkshire sold about \$8.1 billion more shares than it bought.

That makes Berkshire a net seller. A net seller is someone who sells more than they buy over a period of time. Reuters reported that this was Berkshire’s fourteenth straight quarter as a net seller of stocks. (2)

This distinction matters. Berkshire is not saying every company is bad. It is saying the overall opportunity set is not attractive enough for aggressive deployment of capital.

That is exactly how a disciplined investor should behave.

The tiny buyback tells us something

A share buyback happens when a company uses its own money to buy back its own shares. This reduces the number of shares in circulation. If done at the right price, it can make each remaining share more valuable.

Berkshire bought back only about \$235 million of its own shares in the first quarter of 2026. (1)

That sounds like a lot of money. But compared with Berkshire’s liquid resources, it is tiny.

Here is the calculation:

\[\$235\text{ million} \div \$380.154\text{ billion} = 0.000618\] \[0.000618 \times 100 = 0.0618\%\]

So Berkshire used only about 0.06% of its net cash and Treasury bills to buy back its own shares.

Put differently, for every \$100 of liquid money Berkshire had, it used only about 6 cents to buy its own stock.

Why does that matter?

Because Berkshire’s stated rule is that it buys back shares only when the price is below intrinsic value, conservatively estimated. Intrinsic value means the real economic value of a business, based on the cash it can produce in the future, not simply the share price flashing on a screen. Berkshire’s quarterly report repeats that repurchases depend on the chief executive’s conservative assessment of intrinsic value after consultation with the chairman. (1)

A tiny buyback does not prove Berkshire’s shares are expensive. But it suggests Berkshire did not see its own stock as screamingly cheap.

That is an important signal.

The market is expensive by long-term measures

One useful way to think about the whole stock market is to compare the value of all listed companies with the size of the economy.

This is often called the Buffett Indicator. In plain language, it asks:

How expensive is the stock market compared with the economy that supports it?

The formula is:

\[\frac{\text{total stock market value}}{\text{gross domestic product}} \times 100\]

Gross domestic product means the total value of goods and services produced by an economy in a year.

If the total stock market is worth \$50 trillion and the economy produces \$25 trillion a year, the calculation is:

\[\$50\text{ trillion} \div \$25\text{ trillion} = 2\] \[2 \times 100 = 200\%\]

That means the stock market is valued at twice the size of annual economic output.

In LongtermTrends’ Wilshire 5000/GDP data, the United States Buffett Indicator was around 230% in early May 2026: 231.1% on 6 May and 229.9% on 7 May. That means the total value of the United States stock market was more than twice the annual size of the United States economy. (3)

Warren Buffett discussed this type of measure in a 2001 Fortune article. He said that if the relationship between stock market value and national output approached 200%, investors were “playing with fire”. The point was not that a crash must happen immediately. The point was that future returns become harder to justify when the price paid for assets is already very high. (4)

Another valuation measure tells a similar story. The Shiller price-to-earnings ratio compares today’s stock prices with the average inflation-adjusted earnings of the last ten years. In plain language, it smooths out the ups and downs of profits and asks: how much are investors paying for a long-term dollar of earnings?

The formula is:

\[\frac{\text{current market price}}{\text{average inflation-adjusted earnings over ten years}}\]

If the ratio is 42, investors are paying \$42 for each \$1 of average long-term earnings.

On 8 May 2026, Multpl showed the Shiller price-to-earnings ratio at 42.05. Its historical maximum was 44.19 in December 1999, during the dot-com bubble. (5)

That does not mean the market must crash. Expensive markets can become even more expensive. But it does mean the margin of safety is thinner.

Margin of safety means the gap between what something is worth and what you pay for it. The bigger the gap, the more room you have for mistakes. The smaller the gap, the more perfect the future needs to be.

Berkshire’s lesson is about price, not panic

A simple investor might say, “The market is going up, so I must buy.”

A disciplined investor asks, “What am I paying, and what future cash flows am I getting in return?”

That is the difference between price momentum and investment judgement.

If a good business earns \$1 per share and you pay \$10 for it, you are paying 10 times earnings. If the same business still earns \$1 per share but you pay \$40 for it, you are paying 40 times earnings.

The business may be identical. The price is not.

This is why valuation matters. A wonderful company can be a poor investment if the entry price is too high. A boring company can be a good investment if the entry price is low enough and the cash flows are reliable.

Berkshire’s current behaviour fits this logic. It is not saying the world is ending. It is saying: we will not force money into unattractive prices.

Cyber risk shows the same philosophy

The same discipline appears in Berkshire’s insurance thinking.

Insurance sounds simple: a customer pays a premium, and the insurer promises to pay if a bad event happens. But the insurer must price the risk correctly. If it charges too little, one bad year can destroy many years of profit.

Cyber insurance is especially difficult because one attack can hurt many companies at the same time. That is called aggregation risk. In plain language, it means the losses are connected.

For example, if one house catches fire, the loss is usually limited to that house. But if one widely used software system is hacked, thousands of companies may be hit at once. That is much harder to price.

Ajit Jain, Berkshire’s vice chairman for insurance, said Berkshire finds it difficult to model cyber aggregation risk with enough confidence. He said the first question Berkshire asks is “how bad can bad be”, and that in cyber risk the answer is not clear enough. (6)

That is the same investment principle again: do not take a risk unless you understand the possible downside and are paid enough for it.

Berkshire is also cautious when insurance prices are falling. If too much insurance capital chases too little demand, insurers compete by lowering prices. That can make the seller of insurance lose. Jain said that when insurance supply is greater than demand, it becomes difficult to make a deal that is rational for both buyer and seller. (7)

This is not just an insurance lesson. It is an investing lesson.

When everyone wants to sell protection, protection becomes cheap. When everyone wants to buy the same stocks, those stocks become expensive. In both cases, discipline means refusing bad prices.

What ordinary investors should learn

The lesson from Berkshire is not “sell everything”.

It is also not “wait forever”.

The lesson is to separate three ideas that people often mix together.

First, quality. Is the business good?

Second, price. Is the price reasonable?

Third, timing. Do I need to act today?

Many investors focus only on the first point. They find a great company and assume it must be a great investment. But that is incomplete. A great company bought at an absurd price can produce poor returns.

Berkshire’s cash position teaches a different mindset. You do not need to buy simply because you have cash. You do not need to chase simply because markets are rising. You do not need to predict the exact date of a correction to behave sensibly.

You only need to know whether the deal in front of you is good enough.

If it is not, cash is not failure. Cash is stored opportunity.

The final message

Berkshire Hathaway’s \$380 billion cash position is not a magic crash forecast. It is not a calendar telling us when markets will fall.

It is a statement of discipline.

Berkshire is still earning money from its operating businesses. Its first-quarter operating earnings rose to \$11.346 billion from \$9.641 billion a year earlier. It is still buying some shares. It has still made acquisitions, including the OxyChem purchase. But it is not deploying capital aggressively into broad public markets at today’s prices. (1, 2)

That tells us something simple and powerful:

Price matters.

Risk matters.

Patience matters.

In investing, the goal is not to be busy. The goal is to be right often enough, and protected enough, that time works in your favour.

Berkshire is not panicking. It is waiting.

And sometimes, waiting is the most intelligent position in the room.

Berkshire's $380 Billion Lesson: Why Patience Matters More Than Prediction