Transcription
Some folks, and I've heard it many times, have called Warren Buffett a dinosaur and past his prime. But he was staying ready, ready to take advantage of the next situation, like we have experienced in the recent 2025 market collapse. Well, I got news for you. That dinosaur, that guy who made his monies in the 50s, 60s, 70s, 80s, and has lost his way—he's made 11.5 billion in stock market gains since the start of the year, while these other big players seem to be losing money.
Now let me show you how the so-called dinosaur outsmarted the market and what we can all learn about how he thinks. But remember, you shouldn't replicate him because his financial situation is very different than yours, guys. This is the Bloomberg billionaire list. In the top 20, we have two guys who have gained money this year: Warren Buffett and Francois Buttoncourt Meyers. They have each gained money this year. Look at the others: Jeff Bezos down 43 billion, Larry Ellison down 45, Larry Paige down 35, Balmer down 20, and then look at the big one right here: Jensen Wang down 28 billion, Michael Dell down 35 billion. These are big, big losses.
And I remember back in the day when we'd hear about Kathy Wood, and she's crushing Buffett. And I always joke and say, "Guys, I know we're in a bull market, and I know we're in a strong bull market when everybody talks about what Buffett and Munger being has been means." Recently we made a video about Warren Buffett, and now we're seeing exactly why he's playing defense right now. He's not buying stocks; he's not even buying his own stocks. In fact, he's a net seller of stocks. And what happens when the greatest investor of our time steps back? That's not silence; that's a signal. He put it very bluntly: often nothing looks compelling. What does that translate into? He sees a market that's so overpriced it's not worth the risk. Instead of jumping in, he's doing what he does best: waiting, waiting for that moment when filet mignon trades at hamburger prices.
Now, he will say it doesn't happen very often, and when it does happen, you got to be ready to bounce. But in the meantime, he's been doing the opposite of just sitting; he's actually been hitting the sell button. Last year alone, he offloaded $143 billion in stocks and just bought nine. That's a net sale of 134 billion, the largest in Berkshire's history. Now to his cash: Buffett's now sitting on $341 billion in cash, more than half of the stock portfolio and over one-third of the entire market cap of Berkshire Hathaway. He's just not investing. And while he waits, he's earning 4% on short-term treasuries—that's about 13 billion a year just for parking his cash. This isn't fear; this is discipline. It's Buffett saying, "I'll wait, and when the market serves up real value, I'll be ready." And I'll swing at my pitch.
It'll be interesting to see what moves Bush Buffett and Berkshire make in second quarter since the market has started to fall. Guys, Kathy Wood, she has this Ark Investment. When it was up to 160, there was a chart, and it showed—and we can show it right here—and Kathy Wood's crushing Buffett. Everybody said, "Oh my god, Buffett's such a has-been, blah blah blah blah blah." Guys, I want to remind you that every investment is the present value of all future cash flow. You know what that's like? That's like saying gravity exists; it will never not be the case. The only difference will be what return makes sense to you. And when the market's euphoric, people don't calculate returns based on cash flow; they calculate returns based on where the stock has gone as of late, and that's a very different approach. That's not investing; that's speculating. That's looking at price action of a stock and saying it is better because it recently went up. This is not what we teach as part of principal-driven investing.
Our goal is to sit there and say, "Guys, when you make an investment, you lay out cash to buy that." And then your return is going based on all the cash flow you get in the future. There's only two ways in which you can change your returns: pay less money or increase the cash flow. Well, guess what? When you buy Microsoft stock, good luck telling me how you're going to change the future cash flow of Microsoft. It's going to do what it's going to do. So your goal should be to buy it with a margin of safety where even if the heads of Microsoft screw up, you can still get a reasonable return on the money that you invest in that company. Because remember tenant number one of principal-driven investing is we're investors, not speculators.
So what does it do with you in the market? Well, first off, dollar-cost averaging is a great way to invest. Yes, are you overpaying at times? You are, but you're doing it with a plan in place, and that plan is to never guess where the market's going. Because remember this is my very simple chart that I show that gets a lot of attention: this is where market value goes over time, but this is where the price goes. And when you dollar-cost average, you're doing all this, and you've seen this before. I really want you to remember this over and over; it's really important that you ingrain this in your head for the rest of time. Because when the market goes undervalued, you're going to hear people talk about how you can't make money in the market, but you will be the person that said, "Hey, if I bought up here, why would I not buy down here?" And you're going to load up great underneath, and over time you're just going to pay the market average, and that's important to be able to hit your financial goals.
But if you choose to be an individual stock picker on some extra money, you've got to remember these tenants. So that first one: we're investors, not speculators. The second one is what I've already mentioned: every investment is the present value of all future cash flows; the more you pay for that investment, the less return you make. Number three: we don't understand it, don't invest in it. You know, there was a Reddit post that somebody sent me from Warren Buffett talking about Warren Buffett and how he's a has-been and how he admitted that he didn't understand tech back in the day. Guys, what he's saying is he doesn't understand tech. He says, "I can't decide or figure out how much money a company in tech will make 5, 10, 15, 20 years from now." But remember, last year's tech is today's blue chip. When I say last year, I don't literally mean last year—20 years ago, tech is today's blue chip. Today's tech innovation is going to be 20 years from now as blue chip. And Warren Buffett, as he understood these businesses more because they had more track record, he's able to make investments; hence why he had his biggest position at one point into Apple. But Warren Buffett wasn't buying Apple 25 years ago; hell, nobody watching this video was buying Apple 25 years ago; it was a dead company.
Number four: in the short run, stocks are a voting machine; in the long run, they're a weighing machine. What that means is what's popular will go up; what's not popular will go down—popular, unpopular—but in the long run, it'll go up based on the fundamentals or down based on the fundamentals. The best thing you can have is when a stock is going down as the fundamentals are getting better; that's where you make a lot of money. But it requires you to be very good inside here, not very good up here, because this will mess with you. You'll sit there and go, "Why is the stock going down, but the fundamentals are getting better?" Well, I'll tell you what's going to happen is you're going to hear stories about how the stock should be going down because news follows the stock price. And the fifth tenant, and the most important one: a great story can become a bad investment if you pay the wrong price. And when we follow the story as stocks go up, guess what? News follows the stock price; that story is going to be really effing good. And as a stock keeps going up, you're going to say, "Well, it worked here, it worked here, it worked here, it worked here, it worked here." It'll never stop working because this company is amazing. But you guys got to remember: when the masses love something, they're probably overpaying; when the masses hate something, they're probably beating it down too much.
These five tenants of principal-driven investing is how I approach every single investment I make. And so when I look at a company, my goal is—I'm not saying I'm like Buffett; I'm not wealthy like Buffett—but I have more than I need, so I'm only investing in individual companies when I can answer three questions: one, do I think this company will be around for the foreseeable future—10, 20, 30 years? Guys, I'm a lazy guy; I don't have to sit there and buy a company and watch every move it makes and hope that it survives blah blah blah blah blah. Because of that reason, I'm not going to make 20, 30% returns. Number two: the answer to question one is yes. My second question is: do I think that the company in that foreseeable future will make more revenue, more profit, more cash flow than today? If the answer to question two is yes also, I go to the third and final question: can I pay a reasonable price today that pays for that story, that pays for the numbers, that pays for everything that allows me an adequate return on my capital that makes me satisfied? What's that number depends on the company, depends on my situation. If I can answer yes to all three of those questions, I'm probably going to make some sort of investment.
Guys, dollar-cost averaging is such an important part for any sort of investor, including myself, and I really, really preach it because you can try to beat the market, and there are a lot of people who'll be able to, but it's not going to be done up here; it's going to be dumped in the stomach. If you can weather the storm, you can make it, but I still believe that dollar-cost averaging is a good way to hedge your bet, and I preach this all the time, and a lot of people do preach it; it becomes ad nauseam. But then we also have people who still think they can beat the market very handily. So if you want to learn more about dollar-cost averaging, we have a great PDF, free of charge. Click the link below, download the PDF; it's a great guide on dollar-cost averaging; it's something everybody needs to have and also remember over and over again.
So what is Buffett really preparing for with all that cash? It's not just about waiting; it's about warning. Because here's the thing: the last time Buffett held this much cash, he saw something coming, and now we feel—and a lot of people feel—that he's sounding the alarm again. And if you think this market feels familiar, it should. Buffett has seen this movie before. And in our next video, we show you exactly how history is rhyming again and what he thinks happens next. Instead of criticizing him for being a dinosaur, remind yourself, like, hey, there's a lot of wisdom in that man right there. He has seen a lot of markets. And before Munger died last year, 15 months ago, he said it was the hardest market he'd ever seen, and he was 99 years old. So click this next video on the screen to watch our thoughts on Buffett in this market. Thank you for your time.