Buffett Is Hoarding $400 Billion While Companies Print Record Profits: Bull vs Bear, Head to Head

TL;DR Warren Buffett is sitting on nearly $400 billion in cash after 14 consecutive quarters of net selling, and Howard Marks notes that buying the market at today's levels has historically produced 10-year returns between roughly +2% and -2% a year. On the other side: record corporate profits, enormous buybacks, and a century of undefeated recoveries. I don't think picking a side is the right move here.

The smartest people alive are split right down the middle

Jamie Dimon's warning lands harder because he isn't alone. Several of the greatest living investors are quietly doing the same thing — backing away from this market.

And yet people who are exactly as smart have reached the opposite conclusion. So I don't approach this as "who is right." I put both arguments side by side and ask what conditions each one requires to hold. That turns out to be far more useful.

The bear camp: the people hoarding cash

One thing unites the bears: none of them are saying the world is ending. They're saying there is nothing worth buying at these prices. That is a completely different claim.

Warren Buffett. Widely considered the greatest investor of all time, he and Berkshire Hathaway are sitting on a record pile of nearly $400 billion in cash. He has been a net seller of stock for 14 quarters in a row — the longest streak of his entire career. He has called this market a casino. When Buffett would rather hold that much cash than own equities, that alone tells you how expensive he thinks things have gotten. I dug into what that pile actually signals in Berkshire's $397 billion cash signal.

Howard Marks. He offers a much more concrete number. Buy the market at today's pricey levels and history says your returns over the next 10 years have landed somewhere between roughly +2% and -2% a year. Essentially nothing. I'd push that further: by some metrics we have never seen these levels before, which means the outcome could plausibly be worse than that range.

Mohnish Pabrai. This is the one that genuinely surprised me. He says he can no longer even tell a beginner to just buy the whole market, because it has simply become too overpriced. The default advice that nearly every value investor gives — dollar-cost average into an index — is something he now hesitates to give.

Michael Burry. The investor from The Big Short has flat-out warned that the end is near for this market. The obvious pushback is that he has said this many times, and that's fair — he has. But look at any bull market in history: nobody knew when it would end, and markets can stay very expensive for a very long time. He has reportedly been betting against hot names like Palantir, Nvidia and Micron, and doing well with it. He even said he'd love to bet against SpaceX but the cost was too high. Why so many of them are flashing the same signal at once is something I covered in Buffett, Burry and Tudor Jones sounding the same alarm.

The bull camp: three forces holding the market up

Now let's be completely fair and flip it. The reasons a crash may not be coming are every bit as real.

One: companies are still making an enormous amount of money. Despite the scary headlines, large American companies keep posting strong profits and shoppers keep spending. Some of the biggest are more profitable today than they have ever been, sitting on mountains of cash, and growing both the top and bottom line at historically fast rates. Over the long run stock prices follow profits — if you paid a reasonable price. Peter Lynch hammered this point for decades. As long as companies keep earning more, that acts like a floor under the market. In my view this is by far the strongest bull argument of the three.

Two: buybacks and sidelined cash. Cash-rich companies are spending billions a year repurchasing their own shares, and every repurchase creates steady demand. It's like having a giant, reliable customer who shows up to buy every single dip regardless of the news. On top of that, there are still trillions parked in savings and money-market instruments — money that tends to flood back into stocks the moment confidence returns. Buybacks also reduce shares outstanding, so the same earnings get divided by a smaller number, mechanically lifting earnings per share over time.

Three: history is firmly on the bulls' side. The US stock market has lived through the Great Depression, two world wars, the dot-com crash, the financial crisis and a global pandemic. Every single time it eventually recovered and went on to hit brand new all-time highs. No exceptions. And today so many investors believe in buying the dip that the moment stocks fall, buyers rush back in, which can stop a small drop from snowballing into a full-blown panic.

Head to head

Issue	Bear case	Bull case
Valuation	10-year forward returns of +2% to -2% a year (Marks)	Growing earnings resolve valuation over time
Smart money flows	Berkshire net seller 14 quarters, ~$400B cash	Buybacks plus trillions in sidelined cash supply demand
Macro backdrop	Debt, geopolitics and sticky inflation are unpriced	Corporate profits and consumer spending stay resilient
Historical precedent	Lost decades follow entries at extreme valuations	Every crisis has been followed by new highs
Psychology	Risk numbness at a peak	Buy-the-dip reflex cushions declines

I don't accept the buyback argument

I want to be explicit here, because the second bull case is popular and my view differs sharply.

Buying back overpriced shares is not a positive for a company.

A buyback is neither good nor bad on its own. Executed below intrinsic value, it's excellent capital allocation that transfers value to the remaining shareholders. Executed above intrinsic value, it burns shareholder money. Identical action, opposite outcomes, determined entirely by price. The share count falls either way, so EPS looks prettier either way — but the income statement never shows you what management paid to manufacture that number.

Citing buybacks as a bullish force in a stretched valuation regime looks to me like reasoning backwards from the effect to the cause.

So which side should you take? I think that's the wrong question

In the same week, the CEO of JPMorgan says he wouldn't buy and the CEO of Wells Fargo says he's big time bullish. Buffett hoards cash while companies report record profits. Both are true statements about the same market.

Trying to guess who's right is market timing by another name. It's the exact game both Dimon and Buffett have publicly said they don't play.

What I actually do is far simpler: focus on the one thing I control, which is the price I pay. Figure out what a business is worth and buy only when the price offers an ample margin of safety — a cushion that protects me if I'm wrong.

If the bulls are right, shares bought at good prices keep compounding. If the bears are right, I didn't overpay in the first place, so I take less damage and the cash I held buys more. Either way, the position that survives comes from price discipline, not from a forecast.

That's why I'm not taking a side in this debate.