Warren Buffett's Berkshire Hathaway Is Sounding a Warning. What History Tells Us.

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Berkshire Hathaway’s Warning: What South African Investors Should Make of It

Berkshire’s $400bn cash pile and record stock selling signal caution, but history urges patience over panic.

Warren Buffett’s Berkshire Hathaway holding an unprecedented $400 billion in cash and selling stocks for three years straight sets off alarms on Wall Street about market valuations. The Buffett indicator—which compares the total value of stocks to the economy’s size—is at 230%, its peak ever, suggesting stocks are expensive. But here’s the catch: markets can stay overvalued for years before correcting. That means no crash is imminent. South African investors can consider this a reminder to stay measured. For us, the rand’s recent strength versus the dollar might soften the blow if global equities wobble. Stocks like Naspers and Prosus, tied strongly to tech trends, remain vulnerable to US tech valuations but still offer long-term upside. Meanwhile, high-quality, low-debt firms, especially in banking like FirstRand or Nedbank, tend to perform steadier during corrections. Waiting for opportunities and keeping cash on hand to buy when prices dip, as Berkshire does, is much wiser than rushing to sell now. The risk? Global shocks triggering a sharper drop than history suggests. this is just our opinion and not financial advice