Buffett didn't build Berkshire Hathaway (NYSE: BRK.A) by jumping in and out of whatever was hot at the time. He focused on businesses with durable competitive advantages, strong returns on capital, capable management, and predictable earnings power. And, crucially, he tried to buy them at fair prices.

Not necessarily bargain-basement prices. Just fair ones.

It's not about cheap

One of the biggest misconceptions about Warren Buffett is that he only buys stocks when they look dirt cheap on a simple valuation metric.

That might have been closer to the truth early in his career. But over time, he shifted toward buying "a wonderful company at a fair price than a fair company at a wonderful price."

Quality matters more than a low multiple.

A company that can compound earnings at high rates for a decade doesn't need to look optically cheap to be a good investment. If its competitive position is strong enough, time does a lot of the work.

That's the mindset I try to apply when looking at ASX shares today.

What does quality actually mean?

When I think about quality, I'm looking for a few key traits:

Consistent revenue and earnings growth, high or improving returns on capital, strong balance sheets, products or services that are difficult to replicate, and a track record of disciplined capital allocation.

If those boxes are ticked, I'm far more comfortable paying what I consider to be a fair price.

And right now, I think there are several ASX shares that broadly fit that framework.

CSL Ltd (ASX: CSL)

CSL hasn't been a market darling lately. Its shares remain well below their prior highs, and the company has gone through leadership changes and a period of softer earnings momentum.

But I still see a global biotechnology leader with powerful competitive advantages in plasma therapies, vaccines, and specialty medicines.

CSL generates strong cash flow, invests heavily in research and development, and operates in markets with high barriers to entry. While it may not look cheap on traditional metrics, I think it is trading at a far more reasonable price relative to its long-term growth potential than it was a few years ago.

To me, that's closer to Warren Buffett-style fair value for quality.

TechnologyOne Ltd (ASX: TNE)

TechnologyOne is another ASX share I consider quietly high quality.

It has built a dominant position in enterprise software for government and education clients across Australia and increasingly the UK. Its transition to SaaS has strengthened recurring revenue, lifted margins, and improved visibility.

It rarely looks cheap. But the consistency of its growth, low churn, and expanding customer base make it a strong long-term compounder in my view.

If I'm buying for the next 10 years rather than the next 10 weeks, I'm comfortable paying a fair multiple for that kind of reliability.

Breville Group Ltd (ASX: BRG)

Breville is a different type of quality story. It operates in consumer appliances, but it has built premium global brands in categories like coffee and food preparation. It has demonstrated an ability to innovate, expand geographically, and protect margins even in tougher retail environments.

After a period of market volatility and cost pressures, its shares are down heavily from their highs. In light of this, I now see a company with long-term global growth opportunities, especially in North America and Europe, trading at what I would consider a fair entry point.

That combination gets my attention.

James Hardie Industries (ASX: JHX)

James Hardie isn't immune to housing cycles. But over time, it has shown it can grow through them.

Its fibre cement products have strong brand recognition, particularly in the US, and the business benefits from structural trends such as home renovation and repair activity.

While short-term earnings can fluctuate with housing conditions, I believe the company's competitive position and pricing power make it a quality operator. At current levels, I think the valuation reflects cyclical uncertainty without fully discounting its longer-term potential.

That feels like the sort of setup Buffett would at least examine.

Foolish takeaway

The ASX share market has pockets that look stretched, and others that have quietly reset.

If I were taking a Warren Buffett-inspired approach today, I wouldn't be hunting for the cheapest stocks on the board. I'd be looking for high-quality businesses with durable advantages that are trading at fair, not inflated, prices.

For me, shares like CSL, TechnologyOne, Breville, and James Hardie broadly fit that description right now.

The post I'd listen to Warren Buffett and buy quality ASX shares at fair prices today appeared first on The Motley Fool Australia.

Over the last three years, artificial intelligence (AI) has become a theme so influential that the broader market seems to ebb and flow based on this singular narrative. The S&P 500 and Nasdaq Composite indices are both hovering near record highs, with megacap technology stocks being some of the largest contributors to the market's ongoing rally.

While just about every major investment fund on Wall Street can't seem to get enough of AI, Berkshire Hathaway's Warren Buffett -- who just retired as CEO -- has primarily stuck to his contrarian methods. Throughout the AI revolution, Berkshire has been a net seller of stocks -- hoarding cash on its balance sheet and collecting passive income through Treasury bills.

Last quarter, Berkshire finally put some of its excess capital to use and made a significant addition to its portfolio. Let's dig into some of the fund's moves in recent years and try to make sense of what drove these decisions. From there, we'll take a look at valuation and assess if now is a good opportunity to follow in Buffett's footsteps. 

No longer the apple of Buffett's eye

Berkshire Hathaway has long been a fan of consumer businesses and financial services. For decades, many of the firm's largest positions have included insurance companies and banks, as well as a mix of consumer staples and discretionary brands.

Back in 2016, Buffett made headlines following Berkshire's purchase of Apple (NASDAQ: AAPL) stock. Many investors viewed this as a rare instance of Buffett investing in the technology sector. However, given Apple's brand moat, consumer loyalty, robust hardware ecosystem, and steady cash flow generation, the company actually checks off many of Buffett's investment criteria.

A combination of meaningful price appreciation and subsequent buying over the last decade ultimately turned Apple into Berkshire's largest position. Throughout the AI revolution, however, Buffett has been trimming exposure to the iPhone maker.

Data Source: 13f.info

Since the end of 2023, Berkshire has reduced its exposure to Apple by roughly 73%. Many pundits on Wall Street have criticized Apple for being late to the AI market. While I personally agree, I do not think this necessarily played much of a role in Buffett's decision to sell the stock.

To me, the rationale behind these sales was more macro-oriented. Since October 2023, both the S&P 500 and Apple stock have risen by about 60% -- an abnormally high return in a rather short period. Buffett has always exercised prudent judgment. I think taking advantage of a frothy market and rotating capital into more passive vehicles seemed like a better deal in the eyes of Buffett.

Billionaires are plowing into Alphabet stock

For much of the AI revolution, companies such as Nvidia and Palantir Technologies have been the main attractions. When it comes to legacy internet companies, both Amazon and Microsoft have also become heavily featured in the broader AI discussion.

One company that has been relatively quiet for the last few years, however, is Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). For a while, the rise of large language models (LLMs) such as ChatGPT were viewed as a knockout punch for traditional search engines -- namely, Google.

But over the last few years, Alphabet quietly trudged along and built out its AI roadmap. Now, billionaires are finally catching on. During the third quarter, notable investors, including Stanley Druckenmiller, Israel Englander, Ken Griffin, Philippe Laffont, and now Warren Buffett, all poured into Alphabet stock.

Is Alphabet stock a good buy right now?

Alphabet currently boasts a forward price-to-earnings (P/E) multiple of 29. While the time to buy the stock at bargain prices may have passed, there are still plenty of upsides.

GOOGL PE Ratio (Forward) data by YCharts

Today, Alphabet has integrated its own LLM, Gemini, into core aspects of its business -- from an overhauled Google search landing page to the company's Android consumer electronics devices.

In addition, Alphabet has also invested heavily into its own hardware in the form of custom application-specific integrated circuits (ASICs) called Tensor Processing Units (TPUs) -- integrating this technology into its budding cloud computing platform. Most recently, Alphabet announced a $4.7 billion acquisition of Intersect -- a provider of clean energy power sources for data centers.

By vertically integrating all aspects of the AI value chain across its ecosystem, Alphabet is positioning itself to emerge as a durable leader of the next technological supercycle. Against this backdrop, I think Alphabet is poised for meaningful valuation expansion over the next several years and see the company as a compelling opportunity to buy and hold for patient investors with a long-term time horizon -- just like Berkshire Hathaway. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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I chose New Year's Resolutions, because I hope they might help even just one or two of our readers get 2026 off to a good start, financially.

The other choice? Marking Warren Buffett's departure from the corner office at Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) (I own shares).

He will remain Chairman of the company's board, but the 95-year old has decided that after six decades in charge, he'll no longer be the CEO.

And fair enough.

In his characteristically humble way, he recently wrote that he would step down because he wasn't as sharp as he used to be, and because he believed his anointed successor, Greg Abel, would do a better job.

I hope that if you've been reading these notes for any length of time, the name 'Buffett' is a familiar one.

But just in case you're not, Warren Buffett is the investing GOAT – the 'Greatest Of All Time'.

He ran Berkshire Hathaway for 60 years, turning a struggling New England textile mill into his personal investing canvas – and delivered some astonishing returns for himself and for the company's shareholders.

How good?

When he took over, Berkshire shares were changing hands for US$19 each.

Now? Well, they finished 2025 at US$754,800.

No. That's not a typo.

More than three-quarters of a million dollars, each.

And he's retiring, undefeated.

For sixty years, Buffett compounded the company's value by around 20% per annum, on average.

That is simply astonishing.

('Astonishing' is a dramatic understatement, of course, but I don't know what string of superlatives could do a better job than the numbers themselves!).

More than that, though, Buffett spent those 60 years as a teacher. He and his late business partner Charlie Munger freely and happily dispensed their investing wisdom, inviting others to invest the same way.

They didn't hide their expertise, or pretend there was some black box. Other than questions about what Berkshire was buying or selling, any topic was fair game, and they answered question after question from shareholders at the company's annual meeting each year, while writing plenty and giving regular media interviews.

Buffett could rightly have lorded his success over everyone. He could have taken a massive cut of the company's performance as a 'performance fee', and no-one would have considered it unreasonable, given his astonishing run.

Instead?

He lives in the same house he bought decades ago. He took a $100,000 salary (only!) and insisted on paying the company back for any and all use of company assets.

Instead of seeking glory and adulation, he is giving 99% of his wealth to charity and wrote his last letter to shareholders about, of all things, kindness.

Oh he's plenty human. He's made mistakes, personally and professionally. He would be – he is – the first to mention that.

In his last letter, he wrote:

"One perhaps self-serving observation. I'm happy to say I feel better about the second half of my life than the first. My advice: Don't beat yourself up over past mistakes – learn at least a little from them and move on. It is never too late to improve. Get the right heroes and copy them."

And again, perhaps fittingly, his executive career at Berkshire ended not with a bang, but a whimper.

I don't know what happened in the office at Kiewit Plaza, Omaha, on December 31, but there was no external fanfare, no press release, no grand gestures.

I suspect he just shook some hands, had a Coca-Cola (his drink of choice), and left the building.

On a personal level, I have Buffett and The Motley Fool to thank for my professional trajectory – and my personal investing approach.

I found The Oracle of Omaha through my early reading of The Motley Fool's then US-only website, and his teachings and example have shaped my investing approach.

Don't get me wrong: I have no delusions of grandeur. There is only, and will only ever be, one Warren Buffett. But we can learn from his words and actions, and aim to improve our investing, accordingly.

Berkshire will not be the same without Buffett at the executive helm. Nor will the investing world.

He was the man we turned to for reassurance and reminders of the right way to invest when things got tough.

He was the man companies and governments turned to, too, in times of crisis.

He's not gone yet, of course, but he has said will be "going quiet".

His record will likely never be eclipsed, and his example will similarly hard to match, in words, deeds and actions.

We have been lucky to be the recipients of his wisdom and public counsel over his time at Berkshire.

And what should investors take away from that immense body of work?

A few things:

– The value of long-term investing. It works.

– The concept of a company's 'moat': the sustainable competitive advantage that allows it to survive and thrive.

– The idea of having a 'circle of competence' – the things that you know that you know.

– How to think about that circle: it's not the size that counts, it's knowing where the edges are.

– Thinking independently: being fearful when others are greedy, and greedy when they're fearful

– Buffett's popularisation of Ben Graham's concept of 'Mr. Market' – the volatile business partner whose moods you should take advantage of, but whose counsel you should never seek, nor accept.

– The importance of seeing shares as pieces of real businesses, not just digital trading cards.

– The idea of 'intrinsic value' – that a company's shares are worth the value you calculate for them, not just what the market is offering them for on a given day

-The importance of management quality: if they're smart, hard working but lack integrity, you're on a hiding to nothing

– 'The three most important words in investing: Margin of safety': making sure you allow room for error

… and a whole lot more!

Each of those ideas deserves its own article, of course, but hopefully it'll be a reminder of how Buffett invests, and gives you some touchstones to take into 2026 and beyond, courtesy of the investing GOAT.

Well done, Uncle Warren. We thank you and salute you.

Fool on!

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Warren Buffett has never been one to push Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) into hot trends. He gave an excellent reason for that in his 1996 letter to shareholders: 

We are searching for operations that we believe are virtually certain to possess enormous competitive strength ten or twenty years from now. A fast-changing industry environment may offer the chance for huge wins, but it precludes the certainty we seek.

In other words, Buffett would rather be the tortoise than the hare. So, hot trends like internet stocks in 1996 or booming artificial intelligence (AI) companies today don't interest him too much as an investment manager.

Nonetheless, Buffett finds himself in charge of a stock portfolio where roughly 23% of the assets are invested in three companies that are heavily tied to AI -- among them, one of Berkshire's biggest equity purchases of the last few years. But all three have qualities that he generally seeks in investments -- and qualities that will surely set up his successor, Greg Abel, to deliver excellent returns for the next 10 or 20 years or more. 

1. Apple (20.5%)

Apple (NASDAQ: AAPL) has been the largest position in Berkshire Hathaway's equity portfolio since Buffett and his right-hand man, the late Charlie Munger, built up a massive stake in the company between 2016 and 2018. At this year's shareholder meeting, Buffett jokingly thanked Apple CEO Tim Cook for making Berkshire Hathaway shareholders more money than he ever has.

But Buffett has been selling shares of Apple since late 2023. There may be a few reasons for that. First, the stock's weight in the portfolio might have been too much, even for Buffett, who historically keeps a highly concentrated portfolio. At its peak, Apple accounted for about half of the portfolio's value. It remains Berkshire's largest marketable equity holding heading into 2026, based on the conglomerate's most recent SEC disclosures.

Second, Buffett saw what he viewed as an opportunity to take gains while corporate tax rates are low, as he expects that Congress will have to increase tax rates due to the federal government's massive deficits and debts. Lastly, Buffett assessed the valuation of Apple stock and deemed it to be well above its intrinsic value.

That last point is key. Apple hasn't benefited as much as other tech giants from the increase in AI spending on semiconductors, cloud computing infrastructure, and advanced software. It has continued to exhibit steady revenue and earnings growth, though, and its earnings per share have been further boosted by its massive share-repurchase program. But the stock now trades for a premium valuation of about 33 times forward earnings estimates, in line with other big AI stocks.

However, Apple will push its AI ambitions forward next year with the long-awaited release of a revamped Siri that will feature numerous new generative AI capabilities. The advanced AI assistant may spur a big upgrade cycle for the company's devices, pushing iPhone sales higher. Additionally, the introduction of more on-device AI capabilities could increase its high-margin services revenues significantly in the coming years. Based on those expectations, it may be worth paying a premium for Apple stock.

2. Alphabet (1.8%)

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is the latest major addition to Berkshire Hathaway's portfolio. The conglomerate acquired 17.8 million shares during the third quarter, which are worth $5.6 billion as of this writing.

The stock has been on an incredible run since September, when a federal judge imposed remedies upon Alphabet that were much more lenient than expected following its conviction for maintaining an illegal monopoly in online search. Strong financial results and continued momentum for both its cloud computing business and its large language model (LLM) development have helped propel the stock materially higher.

Its cloud computing business has seen strong growth. Revenue climbed 33% last quarter, and its operating margin expanded to 24%, but there could be even more room for margins to expand as it scales. That's especially true given the momentum for its custom Tensor Processing Units (TPUs), which can offer its cloud computing clients a more cost-effective alternative to graphics processing units (GPUs) for AI training and inference. It has signed several big deals with major AI developers to use its TPUs, helping push its remaining performance obligations 46% higher year over year to $155 billion.

The core search business remains a cash cow despite the threat of AI chatbots taking market share away from Google. The company has effectively integrated AI into its search results through AI Overviews and AI Mode, resulting in an increase in search traffic without negatively impacting monetization. As a result, Google Search revenues continue to climb. And that may have been the key to Buffett's decision to invest in the company -- the "enormous competitive strength" of its core business.

As mentioned, Alphabet shares have climbed significantly in Q4, pushing their valuation to almost 30 times expected earnings. It's unclear if Buffett and his team will keep buying shares at that significantly higher valuation, but they could be worth it given the AI-driven momentum behind the company.

3. Amazon (0.7%)

Amazon (NASDAQ: AMZN) has been a small position in Berkshire Hathaway's marketable equity portfolio since 2019. Based on the size of the investment, many believe one of its other investment managers, Ted Weschler or Todd Combs, made the decision to buy it. The driving force behind Amazon's operations when Berkshire first acquired shares in 2019 was its cloud computing division, Amazon Web Services (AWS). That remains true today. 

AWS is the world's largest public cloud computing platform. Its revenue is more than double Google Cloud's, and its operating margin of 35% dwarfs it. Management notes its AI services on AWS are growing at a triple-digit percentage pace, and demand continues to outstrip its ability to add capacity despite three years straight of building as fast as possible.

Like Alphabet, Amazon's massive investment in cloud capacity to capitalize on the AI opportunity is supported by a stalwart business with a wide competitive moat. Amazon's e-commerce business has become increasingly profitable over the past few years. That profitability has been driven by an increase in high-margin advertising sales as a percentage of total revenue, improvements to its logistics network to reduce shipping costs and operating expenses, and the continued growth and scale of its Prime subscription service. As a result, the operating margin for the North American retail business has expanded to 6.6% over the last 12 months, and the international segment's margin sits at a respectable 3.2%.

Amazon shares have recently been weighed down by investors' concerns about the high capital expenditures for its cloud computing business. As of Q3, its free cash flow over the last 12 months fell to $14.8 billion. But as sales continue to grow, margins expand, and capital spending levels off, Amazon should see its free cash flow soar to new highs. That could push the stock price significantly higher, making the stock worth paying a premium multiple of free cash flow for today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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With Warren Buffett about to step down as the CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), investors will surely be sad to see the Oracle of Omaha go.

Not only was Buffett a great CEO and investor who delivered outsize returns for Berkshire shareholders over six decades, but he also uniquely viewed the world, which was fascinating to observe when given the opportunity. Buffett also provided many important life lessons, whether in his annual letters to shareholders or in his occasional television appearances.

Naturally, as Buffett got older, many investors wondered if the 95-year-old was still as good as he used to be. After all, not many people work into their 90s, let alone run one of the largest conglomerates in the world. Luckily, there is an easy way to check.

If you'd invested $500 in Berkshire Class B shares a decade ago, here's how much you would have today.

Berkshire is a different company than it used to be

As Buffett tends to remind investors, Berkshire is quite different from how it used to be, mainly because it is now so large, with an equities portfolio exceeding $300 billion.

This makes it significantly harder for Buffett and his team to move in and out of positions so easily, and Berkshire rarely encounters opportunities large enough that it finds attractive. Still, Berkshire has managed to beat the broader benchmark S&P 500 Index over the past decade.

Data by YCharts.

As you can see above, $500 invested in Berkshire Class B shares a decade ago is now worth $1,868, representing a total return of 274% and just edging out the broader market. I consider this a success, given Berkshire's size and the market's strength over the past decade.

With so much of the S&P 500 currently dominated by high-flying artificial intelligence stocks, I'd also consider Berkshire's stock a safer investment to hold through the business cycle than the broader market. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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As usual, bulls and bears are already dusting off their crystal balls and making bold predictions for 2026 — even though predicting short-term market moves has a success rate not far removed from astrology.

Beyond the noise, optimism around innovation and productivity — particularly driven by AI — remains strong. Corporate earnings across broad parts of the market have been resilient, and risk appetite has largely held up despite persistent geopolitical and economic uncertainty.

At the same time, one of the most influential figures in investing is quietly preparing to step aside.

After more than six decades at the helm, Warren Buffett is nearing the end of his tenure as CEO and chief capital allocator of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). And the actions he and Berkshire have taken in recent years may offer investors one final, valuable lesson.

The rising cash pile tells a story

Berkshire Hathaway's cash balance has been climbing steadily for years. Rather than aggressively deploying capital as markets have rallied, Buffett has been a net seller of equities, a notable departure from much of his historical behaviour.

For decades, Buffett was known for leaning into opportunities, even when sentiment was uncertain. Today, he is doing the opposite: exercising restraint.

That doesn't mean he believes markets are about to collapse. Nor does it suggest equities are inherently unattractive. Instead, it reflects a simple reality: truly compelling opportunities that meet Berkshire's strict criteria are harder to find at current prices.

Size changes the game

One nuance often missed in commentary around Buffett's caution is scale.

Berkshire Hathaway is now one of the largest capital allocators in history. It can no longer meaningfully invest in smaller, fast-growing companies, even if they appear attractively priced. Those opportunities simply do not move the needle.

Buffett needs whales: enormous, high-quality businesses capable of absorbing tens of billions of dollars at a time. That naturally narrows the opportunity set and raises the bar for what qualifies as "investable".

So while parts of the market may look stretched, Buffett's actions also reflect the constraints of size, not just valuation concerns.

Still the greatest investor of our time

Regardless of market conditions, Buffett's track record speaks for itself. Few investors have compounded capital as consistently, across as many cycles, for as long.

That alone makes his behaviour worth studying, especially as he approaches the final chapter of an extraordinary career.

And while markets, industries, and technologies have changed dramatically since the 1960s, Buffett's core principles have remained remarkably stable.

Three takeaways for everyday investors

1. Stick to your process

Buffett has evolved over the years — moving from "cigar butt" bargains to wonderful businesses — but the foundation has not changed. He still focuses on quality companies with durable competitive advantages, purchased at fair or discounted prices.

The lesson is not to copy Buffett's portfolio, but to commit to a repeatable process you understand and trust.

2. Don't confuse patience with fear

Berkshire has not stopped investing. It has simply become more selective.

When Buffett can't find opportunities that meet his standards, he is comfortable holding cash and waiting. History shows that when markets eventually stumble and fear rises, Berkshire is often ready to act decisively.

For individual investors, the message is clear: investing should be rational, not emotional. There is no obligation to deploy capital simply because markets are rising.

3. Never lose sight of the long term

Despite his caution today, Buffett has never wavered in his belief that equities are the greatest wealth-creation vehicle in history.

Human progress continues. Productivity improves. Businesses adapt. Over long periods, the stock market has rewarded patience and discipline.

That conviction has underpinned Buffett's success — and it remains as relevant now as ever.

The enduring lesson

As Buffett prepares to step back, his final message is not a warning of doom. It is a reminder.

Stay disciplined. Respect valuations. Be patient when opportunities are scarce. And above all, keep investing with a long-term mindset.

Markets will rise and fall. Styles will come and go. But the principles that built one of history's greatest investment records remain timeless.

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Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), reminds me of Scrooge from The Christmas Carol. It's a miserly company when it comes to returning cash to its shareholders. The conglomerate hasn't paid a dividend since 1967 and hasn't repurchased any of its stock in five straight quarters. As a result, it sat on a record cash position of $381.7 billion at the end of the third quarter.

However, Berkshire Hathaway's stinginess could end in 2026 when Buffett steps down as CEO and turns over the reins to Greg Abel. Here's why initiating a dividend payment next year makes sense. 

Why Berkshire has been so stingy over the years

Berkshire Hathaway has opted against paying dividends for most of Warren Buffett's tenure. He and his former business partner, Charlie Munger, preferred to retain 100% of the company's earnings. That provided them with the cash to acquire additional operating businesses and invest in publicly traded stocks. They believed that they could earn a higher return for shareholders by reinvesting the company's retained earnings.

Their strategy has certainly paid off over the years. Berkshire Hathaway has produced a staggering 6 million percent return since Buffett took over the company in 1965. That has far outpaced the S&P 500's 46,000% return during that time frame.

Buffett and his team have used the income generated by Berkshire's operating businesses to buy some great companies over the years, including GEICO, BNSF, and See's Candies. They've also made some terrific stock investments, such as Coca-Cola and Apple.

A waning appetite for new investments

While Buffett hasn't had a problem finding opportunities to invest capital throughout most of his tenure, the value-focused investor has found fewer investments to his liking in recent years. Berkshire has sold more stocks than it bought for its equity portfolio in each of the last dozen quarters. These stock sales, which have included trimming its Apple position, have contributed to the rise in its cash position. Meanwhile, Buffett hasn't found too many acquisition opportunities either. Berkshire's recently announced $9.7 billion deal to buy Occidental Petroleum's chemicals subsidiary, OxyChem, is its largest since acquiring insurance company Alleghany Corporation for $11.6 billion in 2022.

Instead, Berkshire has let the cash pile up on its balance sheet, which has allowed it to capitalize on higher interest rates in recent years. The company held about $360 billion of T-bills at the end of the third quarter, which was more than the Federal Reserve's $195 billion. With rates around 3.8%, Berkshire Hathaway is generating meaningful interest income from this investment. However, rates have fallen considerably over the past year, eating into the income Berkshire can generate from its cash.

Why 2026 could be the year of the dividend

With Buffett stepping down as CEO in 2026, Berkshire Hathaway might alter its capital allocation strategy. The company's cash position has continued to build at a time when interest rates are falling, a trend that could persist into 2026. Meanwhile, the company isn't finding enough new investment opportunities to put its growing cash pile to work.

That's why initiating a dividend would make a lot of sense. The company generated an operating profit of $13.5 billion in the third quarter, up from $10 billion in the prior-year period. Meanwhile, its net income, which includes gains and losses on its stock portfolio, has risen from $26.3 billion to $30.8 billion.

Given the company's earnings, it could easily pay over $20 billion in dividends annually, or less than a quarter of its operating profit. It could fund that payment level with its cash position alone for nearly two decades. In other words, it wouldn't lose any of its capacity to capitalize on a future downturn.

It's time for Berkshire to stop being a Scrooge

Berkshire's strategy of retaining all of its earnings made sense when Buffett and Munger were able to find attractive opportunities to reinvest that cash. However, with Munger passing and Buffett passing the torch to Abel, it's time for the company to change its capital allocation strategy, as it is no longer finding good investment opportunities. Paying a dividend makes a lot of sense. It wouldn't consume much of the company's cash and would provide shareholders with some income that they could reinvest or spend as they see fit.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett has been leading holding company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) since 1965. That's 60 years of market trouncing.

As of the end of 2024, Berkshire Hathaway had gained 5,502,284% in per-share market value since Buffett took over, whereas the S&P 500 had gained 39,054% at the same time. When he leaves at the end of the year, it will be with an unmatched legacy and a trove of wisdom for investors.

Buffett may still weigh in about market dynamics and the right approach to investing from a different perch, but he will no longer be writing the company's annual letters, chock-full of his nuggets of wisdom. Here are three of his gems to guide you as you continue your own investing journey.

"No matter how serene today may be, tomorrow is always uncertain."

Buffett wrote this in his 2010 shareholder letter, not too long after the mortgage crisis and subsequent market implosion. He reminded investors that no one saw what was coming in 1987 or 2001, two other times in history when the market crashed.

Although that sounds like a dour take on the market, he actually meant it in a positive way. "Don't let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America," a statement eerily reminiscent of today's political scene. And that was precisely his point: "America's best days lie ahead."

We live in uncertain times, too. There could be an artificial intelligence (AI) bubble, or a cryptocurrency bubble, or a general stock market bubble -- or not. But as Buffett pointed out 15 years ago, that's par for the course. The short term is always uncertain, but the long-term arc has always been upward. Buffett will always bet on America, and don't let the uncertainty keep you out of the markets.

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Buffett is known as a value investor, but he isn't just searching for cheap stocks. Stocks are by definition only bargains if they're valuable; otherwise, they're value traps.

It's the great companies that can withstand market volatility and create shareholder value. So while you don't want to overpay, the more important part of choosing a stock is focusing on a wonderful company.

That doesn't mean Buffett isn't looking for the incredible opportunity of a great company at a cheap price. He demonstrated that when Berkshire Hathaway bought shares of UnitedHealth Group when they dropped a few months ago. The one trait he pointed out about incoming CEO Greg Abel in the most recent shareholder letter is his ability to act when opportunities present themselves.

"When investing, pessimism is your friend, euphoria the enemy."

This is a crucial lesson for investors to keep in mind during strong bull markets -- like today. The S&P 500 continues to rise, posting double-digit gains for the third year in a row, but the market appears to be driven by an AI-based euphoria.

Large hyperscalers are sinking billions of dollars into AI development, and the results have yet to be seen. Berkshire itself invested in Alphabet in the third quarter, so Buffett still sees value in some AI development. He also owns shares of Amazon.

He has warned investors about buying stocks when the market is at a high, noting that "Unfortunately...stocks can't outperform businesses indefinitely." The stock market is highly valued today, which might be why Berkshire Hathaway has been a net seller of stocks for the past 12 quarters and has built up record levels of cash and short-term Treasury bills.

Warren Buffett would counsel investors to stay in the market and keep buying the right stocks under the right circumstances, but be wary of euphoria and embrace pessimism. If you expect the market to rise over the long term, pessimistic markets can offer the greatest opportunities.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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It looks like Buffett isn't the only leadership change at Berkshire Hathaway. Other notable changes include Todd Combs, one of Buffett's key managers, leaving the company to join JPMorgan Chase, and CFO Marc Hamburg announcing his retirement, effective June 2027.

These changes don't necessarily mean that Buffett's influence on Berkshire Hathaway's culture is fading. Still, it does drive home the point that change is inevitable, especially when an icon like Buffett steps down.

Berkshire Hathaway currently has $381.7 billion in cash on its balance sheet. 

Berkshire Hathaway could invest in tech stocks more than it has previously

It's widely known that Berkshire Hathaway hasn't invested very heavily in tech stocks over the years. Warren Buffett typically felt more comfortable in other market sectors, referencing what he called his circle of competence. Even Buffett's investment in Apple seemed more from the standpoint of a consumer products company than a tech stock.

Berkshire Hathaway's tech investments have increased as Buffett has given more authority to his staff in recent years. For example, when Berkshire finally invested in Amazon in 2019, Buffett noted that it wasn't he who bought the stock but one of his fund managers.

More recently, the company opened a nearly $5 billion stake in Alphabet, which, given Buffett's looming retirement, was probably not his investment either. It's hard to deny the importance of technology in modern society, and it's challenging to see how Berkshire Hathaway, at its colossal size, can avoid investing more of its capital in tech companies moving forward.

The company might finally pay a dividend

Buffett has consistently expressed his affinity for dividend stocks throughout his career. He has also been equally vocal about his disdain for the idea of Berkshire Hathaway paying one. Instead, Buffett has long preferred to retain Berkshire's profits and invest them in acquisitions or other opportunities.

It has not been easy to find places to invest all those profits in recent years. Berkshire Hathaway has been a net seller of stocks lately, and Buffett has pointed out the stock market's lofty valuation, as well as refrained from doing many share repurchases.

Now, as Buffett retires, he leaves his successor, Greg Abel, with a $381.7 billion question to tackle: What will the company do with all that cash? The pressure to take action will likely rise as the cash continues to accumulate.

Given the apparent lack of investment opportunities in today's market, a dividend just makes a ton of sense at this point. It could be something small and symbolic, even if it's just a way to share some of the company's profits with shareholders who are looking for reasons to hold the stock after Buffett steps down.

The stock has a higher floor but a lower ceiling

This leads into the final change, and that's the stock's upside moving forward. Berkshire Hathaway is a legendary stock because it has consistently outperformed the broader market for decades, transforming modest investments into substantial fortunes.

But with a $1 trillion market cap, Berkshire Hathaway's massive size is likely to work against it. Buffett himself predicted in his last shareholder letter that a handful of other stocks would outperform Berkshire Hathaway in the future.

The good news is that Berkshire Hathaway is a highly diversified juggernaut. Its subsidiaries and investments span the economy, including energy, manufacturing, insurance, and railroads, among others, and that's before getting into the cash reserves and additional billions of dollars worth of blue chip stocks the company owns.

If nothing else, investors can buy and hold Berkshire Hathaway, knowing that Buffett built the company to last seemingly forever.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett would be the first to tell you that's a great strategy. In fact, he has said that most investors should employ this strategy. However, Buffett and his team sold their S&P 500 exchange-traded funds (ETF) last year, and they've been net sellers of stocks for the past 12 quarters, an unprecedented streak.

Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) cash pile sits at nearly $392 billion, a 200% increase over the past three years, and its highest ever. 

However, I don't think investors should interpret this as a loss of confidence in the market. Buffett is a big believer in the American story and the power of the market to generate shareholder wealth over time. And although he's sold more stocks than he's bought recently, he's still buying.

So how should investors interpret it? It's not hard to see that the market is expensive today, and after three years of high growth, it's looking more and more like there may be a stock market bubble. Buffett clearly doesn't see many opportunities in today's market, and that could be a setup for some kind of correction.

Investors can't know if that's imminent or still years away, but you can set yourself up for success, no matter what happens in 2026. Here's how.

1. Focus on valuation and avoid expensive stocks.

Buffett is known as a value investor, which means that he seeks undervalued stocks that should be expected to rise to their intrinsic value. As the market becomes more expensive, it's harder to find these kinds of stocks, which is why Berkshire Hathaway's stock purchases have been limited over the past two years. The S&P 500 cyclically adjusted P/E (CAPE) ratio is higher than 39, the highest it's been in 25 years.

In general, Buffett prefers high-quality companies to cheap stocks. One of his most oft-quoted quips is that "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." This implies that Buffett doesn't see today's prices as fair, let alone cheap.

It's always important to be choosy about valuation and not overpay for a stock; inflated stocks inevitably lead to a drop. But in this environment, it's crucial.

2. Have some cash ready for deals

Buffett won't claim to know if there's a crash coming in 2026, but elevated valuations sure makes it seem likely that there could be downward pressure soon. If you don't have any cash available, you'll miss the chance to buy stocks on the dip if they fall.

Even in the case that the market continues to climb this year, it becomes all the more important to have cash ready to scoop up the few opportunities that do land. For example, Berkshire Hathaway took a position in healthcare giant United Healthcare in the second quarter likely after it plunged and fell to a P/E ratio of 11. Similarly, it took a position in Alphabet in the third quarter, when its average P/E ratio was 22. Today, it's 31.

3. Keep investing

One Buffett tenet is to stay in the market under pretty much all circumstances. The moment you pull your money out, you cement your losses instead of giving your stocks the chance to rebound. And if you're not buying new stocks, you're missing out on market growth and magic of compounding.

"Certainly in the next 20 years, you'll see a period that will be what somebody in the market described one time as a hair curl compared to anything you've seen before," Buffett said at this year's annual meeting. "The more sophisticated the system gets, the more the surprises can be out of right field. That's just...part of the stock market."

Market volatility is a part of the process. Don't panic sell if things get rough, and keep seeking out opportunities.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Buffett is now approaching retirement, with plans to hand over his CEO role to Greg Abel, currently the company's vice-chairman of non-insurance operations, at the end of the year. But this expert investor has remained active in his final months and quarters of leadership. And that means we can take a look at what Buffett's latest portfolio moves say about the market...

Good news for Buffett fans

First, though, here's some good news for all of you Buffett-watchers: Buffett still will be around as chairman, will go into the Berkshire Hathaway office to share ideas with the team, and he's promised to continue communications through an annual Thanksgiving message. So we may hear about Buffett's thoughts on key subjects well into the future.

Now, let's consider Buffett's general investment strategy over time and the moves he's made in recent quarters. Buffett is known for choosing quality companies with solid competitive advantages, or moats, and investing in them for the long term. The billionaire won't jump into the latest trend even if everyone else is doing so -- and even if it's delivering big returns fast. Buffett prefers companies he can count on over time, and this strategy has been a successful one.

One extremely important point is that Buffett favors value stocks, meaning he aims to buy stocks trading for less than what they truly are worth. The idea is that the rest of the investment community eventually will recognize the strengths of these particular companies and buy the shares -- and these stocks then will rise.

So, what has Buffett been doing lately? The billionaire's moves have been very clear: Over the past 12 quarters, he's been a net seller of stocks, and he's built up Berkshire Hathaway's cash position to reach record levels.

BRK.B Cash and Short Term Investments (Quarterly) data by YCharts

Meanwhile, in his 2024 letter to shareholders, Buffett wrote that it's rare to be "knee-deep" in buying opportunities.

Buffett's moves suggest one thing...

This, along with Buffett's focus on value, says something very clear about the market today -- and a key market metric supports this. The S&P 500 Shiller CAPE ratio, a view of stock price in relation to earnings over 10 years, recently reached beyond 39, a level it's only surpassed once before.

S&P 500 Shiller CAPE Ratio data by YCharts

Buffett's actions, supported by this valuation metric, suggest the stock market is expensive and has been so for a while. But, before you make any abrupt investing decisions based on this, it's important to take a deeper look into Buffett's moves. The Oracle of Omaha, as he's often called, hasn't stopped investing. He's still found opportunities -- for example, he picked up shares of UnitedHealth Group in the second quarter and shares of Alphabet in the third quarter.

Both of these stocks were inexpensive at the time, and they continue to be reasonably priced. This shows us that, even if the overall stock market is pricey, investors still may find interesting opportunities.

UNH PE Ratio (Forward) data by YCharts

Now, looking specifically at the Alphabet purchase, we can draw an additional conclusion. Though technology and artificial intelligence (AI) stocks have climbed over the past few years, this doesn't mean that every AI player is expensive. It's important to consider each company individually -- if you don't, you might miss out on a deal today that may become a winner down the road.

So, Buffett's moves over the past several quarters -- from his selling activity to his accumulation of cash -- suggest that today's market is expensive. And the Shiller CAPE ratio confirms this. But Buffett doesn't recommend staying away. Instead, his investing principles ring true in any market environment, including today's: Look for value, and when you find it, buy and hold for the long term.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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When 2026 gets underway, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) will see the biggest change in its business in decades. That is when investing icon Warren Buffett hands the CEO reins to Greg Abel. Don't fret, however, because Abel is being given a huge parting gift. Here's one very large reason why now is a great time to buy Berkshire Hathaway stock.

Not such a big handover

The media has made a very big deal over Buffett's decision to retire as CEO of Berkshire Hathaway. That's not surprising, given his long history of success in running the company. However, it is important to note that he isn't stepping away and cutting all ties. He will remain the chairman of the board of directors. This is important. 

Currently, Buffett is Abel's boss. After Abel takes over the role of CEO, Buffett will still be his boss. The new CEO is likely to have free rein to manage the company as he sees fit, but only within reason. Buffett tends to be a hands-off manager, but he isn't an absentee manager. He will likely make himself available to Abel as needed and provide a backstop if things start to go south. Abel needs to prove himself, but he isn't flying solo. 

Furthermore, Abel isn't entering the role with no experience. He has worked for Berkshire Hathaway for decades. He has spent the last few years as the designated heir apparent, meaning he's likely been deeply involved in major decisions. Basically, he's well-trained in Buffett's investment approach. Given the success Buffett has achieved, it is highly unlikely that Abel tries to reinvent the wheel.

Abel is starting with a huge backstop

The primary reason to buy Berkshire Hathaway, even during this time of transition, is found on the balance sheet. It isn't really one reason; it is 381 billion reasons. That's the size of the cash hoard Abel is being handed as of the third quarter of 2025.

That $381 billion provides several benefits. It means there's some leeway for Abel to make a mistake or two. It will provide support to the company when, not if, a bear market comes along. And it gives Abel plenty of firepower to buy companies, either outright or in part, in the public market. This is exactly what Buffett has long done as he's built his successful track record.

In fact, in many ways, buying Berkshire Hathaway is really investing alongside the CEO. Historically, that meant giving Buffett your savings to invest. In the future, it will mean allowing Abel that privilege. Most investors should probably think of the company more like a mutual fund than an actual business.

That's not hyperbole. Berkshire Hathaway's portfolio of publicly traded stocks is closely followed by Wall Street. But beyond that, the massive conglomerate owns another 189 companies in their entirety. All of the company's investments are treated similarly. Their management teams have a free hand so long as things are going as expected. If things aren't going well, Buffett steps in to help. Abel will do that in the future, so the basic investment story is the same.

There's never a bad time to hire a good asset manager

Abel will have to prove himself, but given the backstops he has, it seems like he's being set up for success. Those backstops include Buffett's continued presence at the company and, even more importantly, the massive cash balance he's being handed to fund the company's future growth. All in all, if you are a long-term investor, it could still be a great time to buy Berkshire Hathaway stock even as an important leadership transition is being made.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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You won't find Warren Buffett spreading doom and gloom. That isn't his style. Buffett has always been an optimist at heart, even during the most perilous days of the 2008 financial crisis. 

However, Buffett is sending a clear warning as 2026 approaches. How? He has been a net seller of stocks for 12 consecutive quarters – the longest such streak ever since he took over Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). This reflects an unprecedented negative outlook for Buffett as he prepares to step down as Berkshire's CEO at the end of the year.

The "Oracle of Omaha" isn't publicly predicting what he thinks is about to happen with the stock market. He isn't telling investors specific steps to take, either. However, his actions speak volumes. Here are three things investors should do, based on what Buffett is doing himself. 

1. Don't panic

People often refer to Buffett's quote, "[W]e simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." There's a good case to be made that Buffett is fearful right now.

It can be tempting to equate the fear Buffett referenced with panic. But the legendary investor would never recommend panicking.

Sure, Buffett has sold numerous stocks in recent quarters. He wouldn't be a net seller of stocks if that were not the case. However, he hasn't dumped shares in a frenzy.

Do you want proof that Buffett isn't panicking? Simply look at Berkshire's portfolio. It still includes more than 40 stocks valued at over $300 billion. If Buffett were truly nervous about the future, Berkshire wouldn't have so much money tied up in the stock market.

Buffett has held onto positions for which he's most comfortable over the long term, including stalwarts such as American Express (NYSE: AXP) and Coca-Cola (NYSE: KO). That's a good strategy for other investors. Sell any stocks for which you have a lower conviction. Keep those you like the most. And, most importantly, remain calm.

2. Build cash

In the same letter to Berkshire Hathaway shareholders where Buffett provided his famous "be fearful" quote, he also wrote:

As this is written, little fear is visible in Wall Street. Instead, euphoria prevails-and why not? What could be more exhilarating than to participate in a bull market in which the rewards to owners of businesses become gloriously uncoupled from the plodding performances of the businesses themselves. Unfortunately, however, stocks can't outperform businesses indefinitely.

Those words were written in 1987 during a strong bull market, but they remain just as applicable today. The S&P 500 (SNPINDEX: ^GSPC) has skyrocketed to all-time highs. Many investors are fearful, but not in the way Buffett prescribed. They have FOMO -- the fear of missing out.

Buffett, though, understands that the boom will eventually come to a grinding halt. He wouldn't attempt to predict exactly when it will happen. However, he wants Berkshire to be prepared when it does. That's why he has amassed the largest cash stockpile in the company's history – around $382 billion.

BRK.A Cash and Short Term Investments (Quarterly) data by YCharts

Building cash is a smart idea for retail investors, too. It puts you and me in a good position to invest in wonderful companies when prices become more attractive. And with short-term U.S. Treasuries yielding north of 3.5%, you'll still make at least a little money as you wait.

3. Buy selectively

When some hear that Buffett has been a net seller of stocks for 12 consecutive quarters, they might think he hasn't been buying any stocks at all. That's not the case. Buffett has bought some stocks. However, he is buying selectively.

This doesn't mean that Buffett has changed his criteria for investing in stocks because he's worried about the market or the economy. Instead, he remains consistent in applying the criteria he uses, regardless of what's happening externally.

To be specific, Buffett is only buying stocks for Berkshire's portfolio that have attractive valuations relative to their growth prospects. That's exactly what he has done for decades. This is a prudent approach for any investor. Establish your criteria for buying a stock. Make sure it's sound. Then stick to it, selling only when the stock no longer meets your initial investment thesis.

Buffett once used a baseball metaphor to make his point, "The stock market is a no-called-strike game. You don't have to swing at everything – you can wait for your pitch." No matter what's in store for the stock market, wait for your pitch and buy selectively.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett has become an investing legend, and that's thanks to his ability to generate market-beating returns over time. The billionaire, leading Berkshire Hathaway for nearly 60 years, has over that time delivered a compounded annual gain of almost 20% -- that's compared to the S&P 500's compounded annual increase of about 10% over the period.

Buffett has done this by investing in the same manner throughout all market environments: identifying quality companies with strong competitive advantages and getting in on these players for the right price. The famous investor doesn't follow market trends or get caught up in euphoria or despair; instead, he keeps his cool and searches for opportunity.

In recent years, though, opportunity hasn't been as readily available as he would have liked. "Often, nothing looks compelling; very infrequently, we find ourselves knee-deep in opportunities," he wrote in a recent letter to shareholders. And actions Buffett has taken in the quarters leading up to his retirement, set for the end of this year, may be seen as a warning for Wall Street. Let's take a closer look -- and see what history says may happen in 2026.

Buffett's transition

So, first, a quick note about Buffett's retirement. Don't worry: The top investor isn't completely disappearing from the investing scene. He will carry on as chairman of Berkshire Hathaway, but as of Jan. 1, he's turning his role of chief executive officer over to Greg Abel, currently the holding company's vice-chairman of non-insurance operations. Abel will then lead Berkshire Hathaway investment decisions.

In Buffett's final few years as CEO, it doesn't look like he's been "knee-deep" in opportunities because he's been a net seller of stocks for the past 12 consecutive quarters. This means that his stock sales surpassed his equity purchases during each three-month period.

And this brings me to the subject of Buffett's warning to Wall Street. As Buffett favored selling stocks over buying them in recent years, he's also built up a record cash position -- and this continued in the third quarter, with Berkshire Hathaway's cash level reaching $381 billion. So, Buffett has preferred setting aside cash for investing at a later time than allocating it to purchases today.

A trend that Buffett may not like

The investing giant hasn't offered us exact reasons for his decision, but since we do know that he favors buying stocks for a good price, it's fair to say that one key element may be holding him back. And this is valuation.

A look at the S&P 500 Shiller CAPE ratio shows us that stocks are at one of their most expensive levels ever. The metric, a measure of stock price in relation to earnings over a 10-year period, recently climbed to 40, a level it's only reached once before since the S&P 500's formation as a 500-company benchmark.

S&P 500 Shiller CAPE Ratio data by YCharts

Now, let's consider what history has to say about what may happen in 2026. At times when Berkshire Hathaway's cash levels have been on the rise and reached a peak, the S&P 500 then has taken a dip, as you can see in the chart below, particularly in early 2016 and then toward 2017. The S&P 500 Shiller CAPE ratio also has been on the rise prior to these stock market dips, suggesting valuation may play a role in this trend.

BRK.B Cash and Short Term Investments (Quarterly) data by YCharts

The most important point

This historical pattern suggests we may see a dip in stocks in 2026 -- but this doesn't necessarily mean that the year will finish in the negative. Stock market declines that have followed Buffett's increases in cash levels generally have been short-lived, and most important of all, the S&P 500's declines always have resulted in recovery and gains in the years to follow.

So, what does all of this mean for investors? Buffett's actions imply opportunities aren't overly abundant right now -- and that could start weighing on demand for stocks. This "warning" means investors should pay close attention to valuations and avoid buying stocks that are overpriced or have questionable long-term prospects.

Fortunately, though, if stocks do slip in 2026, history shows us these periods aren't long lasting -- and that's why investing for a number of years has been a winning strategy for Warren Buffett and could be a winning strategy for you too. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There are few names in the investing world that have as much of an impact as Warren Buffett, so when the stock market mogul speaks, it often pays to listen.

Some investors have noted that Buffett's holding company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), has been stockpiling cash in recent years. In fact, in the third quarter of 2025, the company's cash holdings reached a record high of nearly $382 billion. That figure has ballooned over the last year, leading some investors to worry that Buffett is predicting a market crash.

Should investors exit the market now? Or is it safe to keep investing? Here's what you need to know. 

Why is Buffett stockpiling cash right now?

On the surface, Berkshire's significant cash holdings may seem to suggest that the market is overvalued. Some investors may take it a step further and assume that a serious market downturn is looming. But there are many reasons why a company may hold a substantial amount in cash.

BRK.B Cash and Short Term Investments (Quarterly) data by YCharts

The market as a whole has earned record-breaking returns over the last few years, and it's not uncommon for investors to rebalance their portfolio or engage in some profit-taking by selling a portion of their shares at these high prices -- leading to greater cash holdings.

At the same time, there's a good chance that Berkshire is simply waiting for the right investment. Buffett has famously rigid standards when making investment decisions, so stockpiling cash likely has less to do with general market uncertainty and more to do with the fact that there are fewer appealing investment options available right now.

"The one problem with the investment business is that things don't come along in an orderly fashion, and they never will," Buffett noted in Berkshire's 2025 annual meeting when asked about the company's cash stockpile. "We'd spend $100 billion, and those decisions are not tough to make, if something is offered that makes sense to us and that we understand and offers good value."

What does this mean for you?

Perhaps the biggest takeaway from Buffett's investing strategy is to focus less on how the market will impact your portfolio and more on being choosy about where you buy.

There's never a wrong time to invest in the stock market as long as you're investing in the right places. If a company has solid fundamentals, offers value, and has room for growth, now can be a fantastic time to buy -- no matter what the market does in the coming weeks or months. Those stocks are always out there; it's just a matter of finding them.

This approach is more important now than ever. Many stocks may be overvalued at the moment, and sometimes, even weak companies can see their stock prices soar when the market is surging. Those investments may look appealing on paper, but if they don't have healthy foundations, they're likely to stumble hard during the next correction or bear market.

"[F]ears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now." -- Warren Buffett, The New York Times, 2008

Strong companies will very likely bounce back from whatever the market throws at them, going on to experience long-term growth. The more of these stocks you own, the less you'll need to worry about the next market downturn.

Berkshire Hathaway's enormous cash pile may be worrying to investors concerned about a stock market crash, but Buffett himself is not sounding any alarms. Rather, his timeless advice to invest only in companies that provide value and have potential for long-term growth can make it easier to navigate these uncertain times. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), has consistently generated returns that far exceed those of the broader market over the six-plus decades that Buffett has led the company.

Between 1964 and 2024, Berkshire's stock generated compound annual gains of 19.9% and a total return of 5,502,284%. Meanwhile, the S&P 500 index generated compound annual gains of 10.4%, including dividends, and a total return of 39,054%.

A major part of Berkshire's success can be attributed to its massive $300 billion-plus equities portfolio. Berkshire invests the float it generates from premiums in its large insurance business into stocks that the company often likes to hold for many years, if not decades.

Buffett and Berkshire's top five holdings

Needless to say, investors are always interested in what stocks the Oracle of Omaha and his team are investing in. Here then are Berkshire's largest holdings at the end of the third quarter of the year, and the amount of the portfolio they represent:

1. Apple -- 21%
2. American Express -- 17.8%
3. Bank of America -- 9.8%
4. Coca-Cola -- 9.3%
5. Chevron -- 5.9%

All of Berkshire's top holdings are in world-renowned companies that have built sizable moats across various sectors. Berkshire first invested in Apple in 2016 and, at one point, had built the position to roughly 40% of Berkshire's portfolio. Since then, however, Berkshire has sold a majority of its position, and I wouldn't be surprised to see the large conglomerate exit Apple entirely over time.

Berkshire has owned American Express and Coca-Cola since the 1980s and 1990s, and these represent two of the company's longest-held investments, likely hand-picked by Buffett.

Buffett and Berkshire used to own many traditional banks, but Bank of America is now one of the few remaining in the portfolio. Chevron is one of several energy stocks and assets that Berkshire owns. Buffett and his team appear to have a high level of long-term conviction in U.S. oil and gas, despite the sector's recent struggles.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Earlier this year, Buffett surprised investors (to the extent that a 95-year-old can) with the announcement of his retirement at the end of 2025. Buffett is set to step down as CEO of Berkshire on 1 January 2026, to be replaced by long-time lieutenant Greg Abel.

It's a momentous changing of the guard at Berkshire, which cannot be understated. Buffett has been CEO at the sprawling conglomerate since the early 1960s. Over that time, he rebuilt Berkshire Hathaway, with the help of the late Charlie Munger, from a failing textiles company to the US$1.1 trillion company it is today. That success was enabled by a compounded rate of return that is estimated to be about 20% per annum over those many decades – an unrivalled achievement in financial history.

Almost every person who has bought Berkshire Hathaway stock in living memory has probably done so to try and hitch their financial wagons to that of Buffett. That includes this writer. After all, the track record has been there for all to see.

But this spectacular era of American capitalism is sadly drawing towards its inevitable conclusion. Sure, Buffett has promised to remain as chairman of Berkshire. But no one can deny that this is the dawning of a new era for Berkshire.

So, as we approach the final month of Buffett's decades-long stint as Berkshire's CEO, is it a good time to sell out of the company that he built?

With Buffett retiring, is it time to sell Berkshire stock?

Well, I don't think so. I personally don't plan to offload my shares anytime soon, anyway.

There are two reasons why I will continue to hold Berkshire in my portfolio.

The first is its nature. Although Buffett is stepping down from the top of Berkshire, his investments will remain. Warren Buffett has built his success on picking the very best businesses for Berkshire's portfolio, and holding them indefinitely. They famously include Coca-Cola Co (NYSE: KO), American Express Co (NYSE: AXP), Apple Inc (NASDAQ: AAPL), and more recently, Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). But those are just some of the public ones. In addition, Berkshire owns a bevy of private companies outright. These include Duracell, Dairy Queen, See's Candies, BNSF Railway, and Geico.

Buffett picked these companies for a reason, and on the assumption that they will continue to pour ever-rising profits into Berkshire's coffers. This is Buffett's legacy that I think will continue to deliver long after he steps off the stage.

Secondly, it's my view that Buffett has set the company up well for success. The succession plan has been in the works for years and has the legendary investor's full approval (and influence). Although I'd wager every shareholder would be keen to see Buffett remain at the helm until Judgement Day, this is the next-best option in my view.

Here's some of what Buffett has said on the succession himself:

I would leave the capital allocation to Greg and he understands businesses extremely well. If you understand businesses, you'll understand common stocks… I think the prospects of Berkshire will be better under Greg's management than mine.

Abel has also stated that:

It's really the investment philosophy and how Warren and the team have allocated capital for the past 60 years. Really, it will not change. And it's the approach we'll take as we go forward.

Although I am sad to see Buffett step away from the company he built from almost nothing, I am confident that its future is rosy. As such, I won't be selling my shares anytime soon.

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Back on May 3, 2025, Warren Buffett announced he would be retiring as CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) at the end of the year. With the end of 2025 quickly approaching, investors have been wondering just what Buffett's role will be starting next year, as well as the implications for Berkshire Hathaway as an investment.

Will Buffett still influence the investing decisions of incoming CEO Greg Abel? Will he write the annual letter? Will he still participate in the annual meeting, which has become known as "Woodstock for capitalists"? And for investors, will Berkshire continue to be a wise addition to their portfolio?

Just the facts

Fortunately for those of us who dislike uncertainty, Buffett wrote a letter to shareholders through Berkshire's corporate website on Nov. 10, 2025, and let us know some of what the future holds for Berkshire. Buffett opened by telling us he would be "going quiet" and would no longer write the annual shareholder letter, which dates back to 1977.

He also said he would no longer "talk endlessly at the annual meeting," which is usually held the first weekend in May. Greg Abel, the incoming CEO, will now preside over the meeting, which attracted nearly 20,000 shareholders and devotees in person in Omaha in May. There was good news, though, for those of us who can't get enough of the Oracle of Omaha: Buffett said that he does plan to communicate with his followers via an "annual Thanksgiving message," which he started in 2024.

For those of us who had no problem with Buffett talking endlessly or who don't like change in general (count me in both of those camps), this letter was a hard pill to swallow. Buffett -- who is 95 -- saying he was "going quiet" also has a final tone to it.

However, Abel and Buffett have been working together for the better part of two decades now, so it is reasonable to assume many aspects of running the Berkshire conglomerate will remain the same. In fact, Abel has indicated that he does not plan to materially change either the investing philosophy or the allocation of Berkshire's capital.

The second annual Thanksgiving letter (here's to hoping this goes for at least another decade) included a nice history of Buffett's childhood in Omaha, where he mentioned purchasing his "first and only home" back in 1958, and, "in the 1990s, Greg lived only a few blocks away from me on Farnam Street." Thinking long term and developing deep, meaningful relationships are part of Buffett's DNA. Buffett also mused in this letter about whether there might be "some magic ingredient in Omaha's water."

Any investment insight?

Many of us are on the lookout for investment opportunities in Buffett's communications. This one was admittedly scant on ideas outside of Berkshire stock. Buffett did indicate he plans to keep a large amount of the Class A Berkshire shares (which carry voting rights) until shareholders are confident that Abel is the right man for the job. Berkshire also owns large stakes in big tech companies, including Apple and a recent position in Alphabet. Berkshire remains one of the best ways to obtain broad, diversified exposure to the best corporations America has to offer. The Alphabet investment could also indicate a growing interest in tech stocks, as opposed to Buffett's hesitation to fully embrace the technology space.

Buffett indicated that he hopes Abel will remain Berkshire's fearless leader for at least "several decades," and that, ideally, Berkshire might need only five or six CEOs over the next century. He opined that, in total, "Berkshire's businesses have moderately better-than-average prospects," but its size remains a hindrance to outperforming the market to the degree it did when Berkshire was a much smaller company.

The future looks bright

However, the bottom line is that "Berkshire has less chance of a devastating disaster" than any other business he can think of. Buffett also suggested that Berkshire, like any stock, could once again fall by around 50% one day, which has occurred three different times in Buffett's 60-year tenure. This volatility is always a possibility, despite humans' best efforts, when investing in the stock market.

To me, this speaks to the stability of Berkshire's stock in times of stress. One could argue that speculation and greed are high in the market right now -- given the ambitious artificial intelligence (AI) buildout, the thousands of cryptocurrencies in existence, less regulation and financial oversight than at times in the past -- but Buffett has undoubtedly constructed a company that is built to last well beyond him. If this is going quietly, I'm all for it.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is nearing the end of an era. Long-time CEO Warren Buffett is retiring at the end of this year. That adds some uncertainty about what's ahead for the conglomerate.

Despite that uncertainty, now is a great time to invest in Berkshire Hathaway. Here's one reason why investors shouldn't hesitate to buy the stock right now.

In a great position

Berkshire Hathaway reported its third-quarter financial results earlier this month, the last time before Warren Buffett's retirement as the CEO. The company reported a robust 34% increase in its operating profit, which rose to $13.5 billion on lower insurance losses in the period. Berkshire also posted a 17% increase in its net income, which rose to $30.8 billion.

The company continued to retain all of its earnings. Berkshire didn't repurchase any of its shares during the quarter (it hasn't bought back stock for five straight quarters) and hasn't paid a dividend since 1967. Additionally, the company continued to be a net seller of stocks out of its investment portfolio. It has sold more stocks than it bought for 12 straight quarters. As a result, Berkshire ended the period with a record $381.7 billion in cash.

While Buffett's company has been a net seller of stocks, including continuing to trim its positions in Apple and Bank of America, the company has a more than $306 billion investment portfolio. Berkshire Hathaway recently added a meaningful new position, purchasing $4.3 billion of shares in Alphabet during the third quarter. The technology giant is currently its 13th largest holding at 1.8% of its investment portfolio.

In addition to its cash position and stock portfolio, Berkshire owns nearly 200 operating businesses, including BNSF railroad, Dairy Queen, and GEICO. With its market capitalization currently over $1 trillion, these operating businesses are worth nearly $400 billion after subtracting Berkshire's cash position and the value of its investment portfolio. The company is bolstering its operating portfolio after recently agreeing to acquire the chemicals business of Occidental Petroleum (one of its largest stock holdings) in a $9.7 billion deal. The acquisition will expand Berkshire's chemicals portfolio (it previously bought Lubrizol for $9.7 billion in 2011), while providing it with another strong operating business that should generate relatively stable and growing earnings.

Tremendous optionality

Warren Buffett is handing over a tremendous company to his successor, Greg Abel. It has a record cash position, a strong portfolio of operating companies, and a massive investment portfolio. That gives Abel an extraordinary amount of flexibility to guide the company in the future.

With a record $381 billion in cash, Abel could buy nearly any company he wanted to expand Berkshire's operating portfolio. He could easily top Buffett's biggest deal, which was the 2016 acquisition of Precision Castparts for $37 billion. However, going for a big splashy deal might not make the most sense, as Buffett eventually lamented the price his company paid for Precision Castparts after writing off nearly $10 billion of that company's value in 2011. More than likely, Abel will remain disciplined and only pursue a sizable acquisition if it's too good to pass up.

Abel can also use the company's massive cash position to add to Berkshire's investment portfolio. He likely had some say in Berkshire's recent decision to make a sizable investment in Alphabet.

Finally, Abel will have the flexibility to return more cash to investors. For example, while Warren Buffett has been reluctant to pay a dividend, Abel might opt to initiate a quarterly payment to return some cash to investors, given the strength of its operating cash flows and size of its cash position. He could also start making more routine share repurchases compared to his value-oriented predecessor. Unless the company starts putting more cash to work in new investments, it might need to return more money to shareholders. It will become increasingly difficult for the company to justify retaining such a large amount of cash on its balance sheet, especially given the expected decline in interest rates as the Federal Reserve continues to lower them.

Starting an exciting new chapter

Berkshire Hathaway is about to turn the page on an illustrious part of its history with Warren Buffett's upcoming retirement. He's leaving the company in great shape and capable hands, which makes the next chapter look exciting. That's why right now looks like a great time to buy shares of Berkshire.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Billionaires Warren Buffett and Bill Gates have been close friends for decades. Unsurprisingly, the Gates Foundation Trust owns more than 21 million shares of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) -- a stake worth around $11 billion. The Gates Foundation Trust sold many stocks last quarter, including part of its Berkshire Hathaway stake.

Why did Gates sell 2.4 million more shares of Berkshire last quarter? There are two obvious reasons

1. Berkshire Hathaway is holding a lot of cash

It's no secret that the stock market in general is getting pretty expensive. The S&P 500 currently trades at roughly 30 times earnings, nearly twice its long-term historical valuation. With that in mind, it would make sense that skilled investors are having a tough time finding market values. Just take a look at Buffett's holding company, Berkshire Hathaway. Buffett has long warned against market timing, yet Berkshire now has more than $380 billion in cash -- more than one-third of its entire market cap!

This oddly makes Berkshire a wonderful investment for those who are worried about the market. It's like buying a mutual fund that has 30% of its investments in cash. If the stock market declines by 10%, you could expect this fund to fall by only 7% if all else were equal. But Berkshire holds a bigger advantage than simply buffering the effect of a market decline. If markets were to experience a correction, Berkshire now has a ton of cash it can deploy at lower valuations. Few investors have this advantage: the ability to put a ton of cash to work while markets are crashing.

In essence, Berkshire is a fantastic choice for nervous investors. By buying shares, you keep your money invested, but have the ability to both shoulder marketwide declines and take advantage of potentially lower valuations if a correction does occur. The portfolio managers at the Gates Foundation Trust are likely aware of these advantages, which may explain why Berkshire is the trust's biggest position. But like Buffett, these portfolio managers may be getting nervous about the market's high valuation. Of the trust's 25 holdings, 12 experienced net selling last quarter. A total of zero positions were increased. So while Berkshire may be a relatively safe stock during market downturns, it appears as if the Gates Foundation Trust is so nervous that even Berkshire isn't a candidate for buying at current levels. 

2. Selling Berkshire stock balances the Gates Foundation Trust's other bets

Selling Berkshire stock has one other benefit for the Gates Foundation Trust's portfolio: more balanced diversification.

Even after the selling, Berkshire remains the trust's largest position, with a 25% portfolio weight. That's right: Roughly one-quarter of the trust's entire portfolio is invested in one stock. Granted, Berkshire itself is fairly diversified, with interests across dozens of industries and geographies. But it's still a single business, leaving the trust's portfolio relatively undiversified versus broader market indexes.

The latest sales brought down Berkshire's portfolio weighting from 30% to 25%. The selling also occurred near Berkshire's all-time highs -- both in terms of trading price and relative valuation. Last quarter, for instance, Berkshire stock had a price-to-book ratio of around 1.6. Over the past decade, however, shares have usually traded between 1.2 and 1.5 times books value. So while the net selling of Berkshire stock by the Gates Foundation Trust may relate to market valuations and diversification needs, it may also be an indication that it simply thinks that Berkshire stock is overvalued. The fact that Buffett himself declined to execute any share repurchases last quarter backs up this belief.

Both Gates and Buffett have preached long holding periods. Buffett is clearly nervous about today's market valuations, leaving him so unable to find deals that he needs to sell down top positions simply to hold cash. The selling by the Gates Foundation Trust seems to mirror this nervousness. But remember that this isn't Gates' personal portfolio -- it is the portfolio of a charitable trust whose primary mission is to distribute profits to other causes. Selling, therefore, could simply be the trust delivering on its mission statement, and not a signal of its skittishness over current market valuations.

Still, the foundation has been a net buyer of stock is previous quarters. So while the selling isn't a smoking gun, it's another potentially bearish sign for investors.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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