Buffett’s record cash pile is true. The panic is not.
The chart the fearmongers showed you is missing its denominator.
The internet spent the weekend scared of one number. Warren Buffett is sitting on nearly $400 billion in cash, the largest pile in Berkshire history. He must know something. Top is in.
I rebuilt the chart from the 10-Ks myself, and they’re right. It is a record. Then I made the chart they didn’t show you.
Berkshire’s market cap rose right alongside the cash. Normalize one against the other and Buffett is about 37% cash. His normal range is roughly 20 to 35%, and 37% is about where he sat in 2005, another high-rate stretch when cash actually paid you to hold it. The pile grew 9 times while the company grew 8 times. A record by 4 points, not a siren.
And 2005 is the tell. People say he called the financial crisis with his cash. Ask him and he says pure coincidence. The market ripped another 25% after that before anything broke.
The lesson is the whole job: never trust a headline number that hasn’t been normalized. It’s the same reason we use ATR stops instead of “10% against me and I’m out.” A 10% move is nothing in one stock and a catastrophe in another. Every stat needs its denominator, and every one of our systems is built that way, drawdowns included.
If you want the trading built on normalized data, with entries, stops, and sizing delivered, that’s Stats Edge Pro. $149.99 a month, 30-day money-back guarantee.
Michael Nauss, CMT, CAIA, CDMS