Hey all,

I’ve been thinking reading a lot on Warren Buffett lately to get some good wisdom as we are near the peak of the market, and who better to learn from than the GOAT of investing himself.

I care about the same basic things you do: keeping our family secure, making money work for us instead of against us, finding our edges and highest risk to rewards opportunities, and avoiding panic when the market gets noisy. When someone like Warren Buffett does something unusual — like building the biggest cash pile he’s ever had — it’s not a secret code but it’s a useful signal. It tells us about prices, opportunities, and risk in the economy. I’ll explain what Buffett did, why he might have done it, how it ties into big-picture cycles (including the 18.6-year real estate rhythm), and how you can turn that into simple actions you can actually use.

Last year, Warren Buffett and Berkshire Hathaway have built an enormous cash pile: about $347 billion. That cash is roughly 30% of Berkshire’s assets — the largest share on record. Buffett’s cash levels have spiked before big problems: around 2000 (dotcom), 2006–2008 (housing and financial crisis), and 2021–2022 (market top and correction).

Buffett says he is not trying to predict recessions. He looks for great businesses at reasonable prices, and if he can’t find them, he holds cash.

Cash is not glamorous, but it’s power. When prices fall, cash lets you buy bargains.

And what Warren Buffett is doing is reflective of today’s valuations. Right now, the market looks expensive by many measures, including his own favorite — the Buffett Indicator (total market cap divided by GDP)

Today the Buffett Indicator is around 200%: the stock market’s total value is about twice US GDP.

Historically, that’s very high — the last similar highs were around the dotcom peak. High values mean future returns may be lower and big corrections are more likely.

But remember: High valuations can stay high longer than we expect. They are not a timing tool. They’re a caution light, not a countdown clock.

I believe in simple ideas that work over time, because they protect you when people panic and they reward patience.

Principles I follow:

Buffett and Benjamin Graham taught:

When Buffett holds cash, he isn’t saying the economy will collapse next week. He’s saying businesses are expensive relative to what they earn, so it’s better to wait.

Cash also gives him optionality. If prices fall, he can buy wonderful businesses cheaply. Historically, high cash has helped Berkshire avoid big losses and profit much later.

If most stocks are expensive, I reduce the share of speculative bets in my portfolio. I also increase my cash and bond stacks as valuation of the market gets higher and higher, up to 75% max in case I am wrong.

If I do buy stocks, I focus on companies with steady earnings, strong balance sheets, margin of safety, profitability and moats (brands, network effects, patents).

And especially, I don’t try to time the top or the bottom perfectly. I use dollar-cost averaging to buy over time after the peak. But the knowledge of cycles have helped me significantly in the past to get this yearly timing a bit better (so yes I do still try to time, but more on a yearly timeframe, rather than an exact month or date). More on cycle info in the next 2 weeks.

I’m staying patient. I’m not predicting a crash, but I’m respecting high valuations and guarding capital. I’m keeping cash ready, focusing on value, and watching credit signals and the long real estate cycle. When I see real bargains — strong businesses trading well below intrinsic value or real estate with healthy fundamentals and good margins of safety — I’ll act. Until then, I prefer safety and readiness over chasing the latest hot asset.

If you find this article interesting, please let us know your thoughts down below here. We also have have other similar articles on our website too.

Sharing with you the tools I’m using at the moment.

📚 Books I read: https://linktr.ee/smartxcapital

I’m building something for investors who want to move smarter — not faster.

A place where we’ll track these cycles together, share real-time insights, and learn how to invest with the cycle — not against it. I’ll be offering workshops, tutorials, and in-depth guides to help you build a timeless investing system that grows through every boom and bust.

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Because when every major cycle converges — the prepared don’t panic. They profit.

Talk soon,

Ace — Smart X Capital’s Founder