Image source: The Motley Fool
After hitting a record high on 19 February, the S&P 500 then plunged after President Trump announced steep tariffs on US imports. The S&P 500 crashed to its 2025 low on 7 April, losing 21.3% in weeks. Meanwhile, Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) had $334.2 billion in cash and cash equivalents at end-2024. Whoa.
Did Buffett foresee a crash?
I’ve seen this question asked several times in 2025 (including by me) as the US stock market slipped. Who knows the thoughts of this 94-year-old investing genius? However, Warren’s warned repeatedly that American shares were priced close to perfection.
Indeed, the Oracle of Omaha sold stocks heavily in late 2024, building a massive cash pile to buy big when the buying looks good again. Even after selling $143bn of shares in 2024, Berkshire’s stock portfolio was worth $272bn. (This sum is larger than all but a few European businesses.)
Warren’s advice for tough times
For me, Warren Buffett is the greatest investor of modern times. His market wisdom is immaculate — and when (rarely) wrong, he is humble and owns his mistakes.
In 2025’s yearly letter to Berkshire shareholders, Buffett stated that he would “never prefer [cash] over the ownership of good businesses”. This backs an earlier quote from Uncle Warren: “cash is always a bad investment”.
What advice does this mega-billionaire have on coping with stock-market crashes? Here are five quotes culled from my extensive Buffett library:
1. “Be fearful when others are greedy and be greedy when others are fearful.” (from mid-October 2008) — In other words, be contrarian. Buy when there’s blood in the streets, even if it is your own.
2. “American magic has always prevailed, and it will do so again.” (Shareholder meeting, 2020) — Markets have been shaken by President Trump, but America still has the world’s largest economy, stock markets, bond markets, and reserve currency — all underpinning American exceptionalism.
3. “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold.” (Letter to shareholders, 2016) — Following the stock-market crash of spring 2020, we had another this month. That’s two great opportunities for brave dip-buyers in just five years.
4. “Just buy something for less than it’s worth.” (Lecture to Notre Dame faculty, 1991) — Spoken like the old-school value investor Buffett is. Another similar quote is, “buy great companies at fair [share] prices”, my market mantra.
5. “It’s never paid to bet against America. We come through things, but it’s not always a smooth ride.” (January 2009) — As per quote #2.
We backed Buffett
Taking Warren Buffett’s advice, my wife and I bought into Berkshire in November 2022. This stock looked cheap back then, but doesn’t appear expensive today, even after rising nearly 90%.
Today, investors can buy Berkshire B shares for $530.15 each, valuing this group at $1.1trn. They are up 15.8% in six months, 30.6% over one year, and 184.2% over five — thrashing the S&P 500. Yet they trade on a modest multiple of 12.6 times trailing earnings, delivering an earnings yield of 7.9%. There is no dividend, but I prefer Buffett to keep my cash.
Of course, Buffett can’t keep going forever, but he may never retire from Berkshire. His close friend and vice-chair Charlie Munger lived to 99, so I hope Warren outlasts Charlie!
