In February, Warren Buffett took pains in his annual letter to Berkshire Hathaway shareholders to explain why the conglomerate had a cash pile of $334 billion at the end of 2024.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett wrote. “That preference won’t change.”
Now, with Berkshire’s annual meeting just a month away, Buffett may not feel quite the same pull to further explain his decision.
When Buffett published his annual letter on Saturday, Feb. 22, Trump’s tariff threats were mostly that.
The S&P 500 had closed at a record high on Tuesday, Feb. 19, a few days earlier.
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities — mostly American equities although many of these will have international operations of significance,” Buffett wrote.
“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”
Buffett didn’t mention tariffs in his letter once, nor did he suggest any sense of foreboding or even loosely predict any imminent market turbulence in this letter. (In an interview that aired in March, Buffett did warn on the negative impacts on tariffs, calling them “an act of war, to some degree.”)
Still, Buffett’s actions in 2024 were clear: the Oracle of Omaha preferred sitting on cash to buying more stocks.
A prescient move that has rewarded investors — Berkshire Hathaway stock is up over 12% this year; the S&P 500 has lost 11%.
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By mid-May, Berkshire Hathaway will have some answers to questions about whether Buffett found opportunities to deploy some of this cash during the market’s worst quarter since 2022.
The company will file its quarterly report ahead of its May 3 shareholder meeting, and Berkshire is required to file its Form 13-F with the SEC by May 15.
And there’s no doubt that he wants Berkshire to deploy, if it can. In his annual letter, Buffett added that what the US financial system actually requires from its participants is less of what Berkshire had done — saving — and more “imaginative” deployment of any accumulated capital back into the economy.
The market action this week has shown investor confidence drying up. Consumers were already souring on the economic outlook before Trump’s sweeping tariffs were revealed. In the weeks ahead, corporations may follow suit.
But what Buffett’s letter outlines is a system that requires the opposite of saving and austerity.
“One way or another, the sensible — better yet imaginative — deployment of savings by citizens is required to propel an ever-growing societal output of desired goods and services,” Buffett wrote. “This system is called capitalism. It has its faults and abuses — in certain respects more egregious now than ever — but it also can work wonders unmatched by other economic systems.”
Seen through the lens of this week’s actions on tariffs, Buffett is essentially noting the simple economic fact that an open economy outperforms a closed economy. And making a direct critique of uncertainty, and a roundabout one of 2025’s tariff drama.
In a post on his social media platform Truth Social on Friday, Trump told investors “my policies will never change.” Meaning: invest in the US or face the consequences (read: tariffs). The economy is open, it seems, but conditionally.
For any of these desired or planned investments to pay off, of course, it will require American savings to be spent down and buy-in from more than the political allies of any world leader. But for people to spend, they need to be assured of the conditions of the market into which they’re spending.
“True, our country in its infancy sometimes borrowed abroad to supplement our own savings,” Buffett added.
“But, concurrently, we needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy the capital thus made available. If America had consumed all that it produced, the country would have been spinning its wheels.”
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