Warren Buffett will step down as CEO of Berkshire Hathaway at the end of the year, and Greg Abel will take over. However, Buffett will remain chairman of the board. The company’s recent third-quarter earnings report shows that Buffett is still cautious about investing in the stock market.
Berkshire has piled up cash, growing its cash reserves to over $377 billion. The company sold more stocks than it bought during the quarter and made only one big acquisition last year. This suggests that Berkshire finds little attractive in today’s market, which trades at high prices.
The Buffett indicator shows that the stock market is currently overvalued. Historically, Buffett considered the market to be overvalued if this metric surpassed 100%. A value above 220% indicates a very high valuation level.
Despite this warning, investors shouldn’t panic. Running Berkshire’s massive portfolio and conglomerate is different from managing individual retirement portfolios. However, concerned investors can reduce their risk exposure by holding more cash, diversifying their holdings, or seeking out stable dividend stocks.
Warren Buffett’s long-term investment approach can help navigate economic cycles. He invests with a cautious mindset during strong markets and has historically sidestepped huge market downturns. However, the upcoming leadership transition may also be driven by Berkshire stockpiling cash to give Abel a strong foundation for his new role.
Source: https://www.fool.com/investing/2025/11/09/as-warren-buffett-prepares-to-step-down-his-warnin