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I just don't see anything available that gives any reasonable hope of delivering a good year. Therefore, we will be liquidating holdings throughout the year. This is a quote from Warren Buffett just 5 months before he retired his fund and gave his investors all their money back the first time. Because while Berkshire Hathaway has been selling more stocks than they've been buying for years, building up the largest cash position in Buffett's history as an investor as he steps away from being CEO in 2026.
This isn't the first time that Buffett has said the market is too expensive and stopped buying stocks. And Buffett's final trades at the head of Berkshire give us a clear warning about what he thinks of the current market. And they echo another time when he made similar moves back when he shut down his first investing fund in 1969, just before a major market downturn and a decade of stagflation when stocks delivered zero real returns for more than 10 years as inflation crushed real purchasing power.
So, let's look at Buffett's final trades at the helm of Berkshire, what those moves tell us about the market today, and how 2026 compares to 1969, right before what became a lost market decade, and what we can learn about the future of today's market based on history, as well as the exact playbook that Buffett used to not just survive, but make more profits than ever during a market downturn that we can take some lessons from.
So, let's just start with what Buffett's final trades looked like. This is Berkshire Hathaway's last 13F filing of 2025, the last year with Buffett as CEO. And it's like a cheat sheet of every stock that they bought and sold in recent months. And we can clearly see a pattern in these trades. Berkshire bought a few companies, Alphabet, SiriusXM, Chub Insurance, but he also sold a lot of shares, including some in his biggest positions such as Apple and Bank of America.
And this matches a broader pattern in Buffett's trades where they have been selling off more stocks than they've been buying for the last several years. This has caused them to build up a large cash position which now sits at over $380 billion on the sidelines, implying Buffett just isn't seeing a ton of good deals on the market today.
And that has only gotten more extreme over time. This is a chart of Berkshire's cash position since the 1990s. We can see that it rose steadily as Bergkshire grew. But then in recent quarters, it has absolutely skyrocketed. Bergkshire's cash would be enough to buy all of Starbucks, Ford, Twitter, the New York Times, Target, and Zoom all combined.
In fact, if we just look at Berkshire's investment portfolio, cash now makes up the majority of Buffett's holdings at over 50% of their investments. This drops to 30% if we include Buffett and their subsidiaries. But doesn't this whole thing seem a little strange? I mean, Buffett is the ultimate long-term buy and hold investor who always says to never try to time the market.
But that made me curious. Has Buffett made moves like this before? Well, it turns out in 1969 at one point he sold 100% of his investment fund, shutting it down completely and returning the money to his partners. and why he did that as well as what happened next can give modern investors a lot of insight into both what Buffett is thinking and what might be next for today's market.
So let's get back to that Buffett quote from earlier where he said, "I just don't see anything available that gives any reasonable hope of delivering a good year. Therefore, we will be liquidating holdings." Buffett made that statement in this letter from May of 1969 while running his first investing partnership, the famous Buffett partnership.
This was a fund that predates Berkshire Hathway actually and he started it when he was only 25 years old and he had been running it very successfully for 13 years when he wrote this letter. At the time he was also running several other investing funds in parallel including one that would go on to become modern Berkshire Hathaway.
But at the time Buffett was clearly worried. The market had run up quickly during the 1960s kind of like the runup we've seen in technology stocks in modern times. In the 16 years Buffett was running his fund, stocks had returned 152%. Buffett had done even better, up nearly 2,800%. With the biggest winners of the stock market, a small group of stocks called the Nifty50.
This was a list of 50 well-known companies that were considered one decision stocks by the market. Meaning, the only decision you had to make was how much to buy, not if you should buy. Everyone thought these stocks would go up forever. Sounds kind of familiar. I recognize some stocks on this list. Coca-Cola, Fizer, Walt Disney Company.
Oh, Sears, rest in peace. But after stocks had run up so quickly, Buffett was worried about investor expectations. See, stocks were getting more expensive, but investors were getting used to the crazy high returns that they had seen for the last 13 years. And so, Buffett was struggling to find good stocks that were worth buying at the new high prices.
And we'll see in a second how this parallels today's market. But here's a clip of Buffett explaining what the situation was like 30 years later in 1999, which side note, this clip was filmed during the.com bubble. And so that's kind of the context that Buffett is operating under. In the 1969 period when I closed up, had a somewhat similar situation in terms of finding things.
I really felt that the expectations of people had been so raised by the experience we'd had over the previous 13 years that it made me very uncomfortable. Yeah, I think there are some similarities between 1969 and70. You will find waves of optimism and pessimism and they'll never be exactly like they were before, but they will come in some form or other.
So, just like in the dot bubble, where internet prices drove the markets to wild prices, often without any real value to back them up. The 1969 market had stocks trading at prices that Buffett didn't think were worth it. He just wouldn't get a good return if he bought them at their new higher prices, even if they were good companies like Coca-Cola.
And this matters because Buffett ended up being right in his prediction in both cases. Buffett said stocks were expensive in 1999. Well, in the next year, we would see the dot bubble burst into a major market crash and a lost decade in stocks where the market returned zero real returns for a decade.
Buffett, of course, did a lot better than that. And 30 years earlier, he saw the same thing. He actually closed down his fund when he couldn't find deals. And the market went on to crash in 1973 and turn into the lost market of the 1970s stagflation era. So now here we are 60 years later and Buffett is starting to make similar moves, holding cash and not buying as many stocks.
So why is that? Why is Buffett so worried about today's market? Well, let's take a look at the similarities today versus 1969 as well as the differences so we can spot the warning signs before the next downturn like Buffett has done again and again. Well, for one, the market has been changing rapidly.
The rise of AI stocks has made huge returns for some investors while others are predicting their imminent downfall. But even if AI stocks decline in value, their technology is probably going to stick around. Like, have you seen some of the newest AI tools? They're getting kind of spooky. Like, check this out.
This is my face controlling a version of Warren Buffett's using AI. There's this company, Higsfield AI, and I can just upload a photo of Warren Buffett, plus a video of me talking, and it puts those two things together. Like I said, kind of spooky. So, Higsfield AI reached out to sponsor this video, and I think it's important for people to see how advanced this technology has gotten because it is still improving.
Like there's been one issue where when you make AI videos, they're very short and they're not that consistent from one frame to another. But with Higsfield Cinema Studio, I can create cohesive video across cuts with visual reasoning built in. So it handles equations like how many drawings are on a whiteboard between scenes.
Or if you just need to clean up some footage, it can fix aspect ratios or even change where the focus of the camera is in a piece of footage. Higsfield has built onto the latest AI models, Google's Nano Banana Pro, Clling 2.6 audio, and the WAN 2.5 video model, putting all the most powerful AI media tools in one place.
So, it's not just generating videos. It can act as a tool to help edit and improve content. So, I'm old school. My editor and I still do everything the old-fashioned way, but in 2026, I think it's important that people are aware that these tools exist. It's kind of cool, kind of creepy, but you can check it out using the link in the description.
It is worth spending some time in there. So, now that we've seen what's coming with AI technology, let's take a look backward to see how the 1969 market compares with today and how modern investors can learn from Buffett's playbook to prepare for what's coming. So, the most obvious comparison between 1969 and today are market valuations.
The Buffett indicator, which is a metric that Warren Buffett actually invented, is sitting near an all-time high, similar to the range we saw before the market crash of the 1970s. The Buffett indicator is a way to compare the value of all the stocks in the US versus GDP. And so it gives a rough approximation for how over or undervalued the entire stock market is.
And this is because the S&P 500, the 500 biggest stocks in the US have collectively risen over 200% in the last decade, echoing the massive gains that we saw by Buffett in the 1960s. And just like the 1960s had their nifty50 stocks that everyone was buying, we have our own version in 2026 called the Magnificent 7.
These seven stocks have collectively driven 41% of the market's recent rise. In fact, these companies have grown so much that they now make up more than onethird of the entire S&P 500. That stat blows my mind every time I see it. Seven companies are now worth around 35% of the entire value of the top 500.
Meaning the other 497 companies combined only make up around 65% of the total value. And that is the most concentrated the stock market has been in just a few stocks for at least a 100red years. And for reference, here's the concentration of the market in the 1960s before Buffett sold his fund. So if you had bought into the Nifty50 stocks right at their peak, you would have gone on to lose 43% of your money.
So if we see a downturn in the stock market today, there's at least a decent chance that it will start with the Magnificent 7, and we've already seen some shakiness in that area. Now, I should say that even though the Nifty50 ended up crashing shortly after Buffett sold out, if you were a very long-term investor, you actually would have done okay holding those stocks.
I found this great article arguing that the collapse in price the Nifty50 saw throughout the 1970s was more about a loss of confidence in the stocks rather than them being overvalued. Because long-term, these 50 stocks did about as well as the broader stock market. So that will tie in with Buffett's playbook a little later and how we can weather the storm during a market downturn.
But there's a much more important comparison between today's market and the 1960s and it's one that looks a little more concerning. So it centers around the risk of stagflation. Stagflation is a rare specific type of economy where you see basically a double whammy. You need two things for stagflation to occur.
a stagnant economy, meaning either a recession or at least close to a recession with stock prices declining, increasing unemployment, basically things just getting harder for your average person. And then on top of that, you add a second hit, high inflation amid a devaluing US currency. So prices are going up, but wages and economic growth are stagnant or dropping.
It's the worst of both worlds. And Buffett has been very vocal about his fears around the US dollar, especially amid government spending and increased tension with our traditional trade partners. In Buffett's own words, fiscal policy is what scares me. In the United States, the natural course of government is to make the currency worth less.
So those two pillars, economic growth and currency value, are like the pillars that are holding back the threat of stagflation. And Buffett is clearly worried about the second. But at least for the first right now, we seem to be okay. Consumer spending was actually up last quarter, but jobs growth did look a little shaky.
It's not enough to panic. And given the fact that the market is so reliant on a few companies to stay up right now, it's understandable that Buffett would be worried about what is going to happen next in the overall market. At the very least, it's a delicate balance, and should either pillar fall, it could quickly spiral out of control like it did after Buffett sold his fund in 1969.
And I made a whole video breaking down Buffett's concerns around the US dollar in more detail. But as scary as a 1970s market crash followed by stagflation sounds, not everything in today's market looks like 1969. US companies are much more international today, so they're less reliant on just the US economy.
And even in 1969 when Buffett shut down the Buffett partnership, he ended up moving a lot of those funds over into Berkshire Hathway. The main reason being with Bergkshire, he could invest as long-term as he wanted. While in his partnership, he had to think a little more short term. And today, Buffett is not shutting down Berkshire Hathaway.
He's handing the reigns over to Greg Ael, who's actually worked behind the scenes at Berkshire for over 25 years. So all that to say, no one can ever predict fully what is going to happen next in the market, but we can take specific moves to prepare ourselves if we do see a 1970s style market crash or even just a decade of stocks trading sideways.
So let's now take a look at Buffett's playbook for what we can do if we do see another lost market style decade. So Buffett always tells investors not to try to time the market. Meaning don't sell out of your stocks and then try to buy back in when the market dips. Study after study shows that investors fail miserably when they try to time the overall market.
Instead, Buffett tends to act on stocks and individual industries based on the data and the risks in that current market. So let's look at the three main strategies Buffett has been using leading up to his retirement from Bergkshire Hathaway. So, strategy number one, build cash for offense, not defense.
Buffett is currently sitting on a record amount of cash, over $300 billion. But he's not doing that out of fear of a market crash. He's doing it to be flexible so that when opportunities appear, he has cash ready to deploy into them. Personally, I don't plan to sell any stocks to build up cash because I earn an income and so I can use my paycheck to cash flow into my portfolio over time.
So, if you can, this would be the time to start building up your cash position as much as you can. So, if that means cutting your expenses or earning more income, anything you can do now will compound over the course of your life when opportunities appear, just like they always did for Warren Buffett.
As Buffett once said, we make our best deals when people are the most pessimistic. So, build cash for when deals appear because eventually they always do. Okay. Strategy number two, ignore the hype. Buffett showed in 1969 that he was willing to step back from the table when he couldn't find any stocks that he knew well that were also at a good price.
While everyone else was buying the Nifty50, he refused to adjust his strategy to fit the external pressures. For modern investors, that means not changing your investments to chase whatever the latest hype is. Whether that's fang stocks, crypto, magnificent 7, AI, it's more important to stick to your strategy than to try to adapt your strategy to be perfect for whatever the current market is doing.
One way that I deal with this is by investing most of my money into passive index funds that track different areas of the market. I like to put 1/3 into the S&P 500, 1/3 into small cap growth, and 1/3 into international stocks, especially now with the S&P super concentrated. So let's look at strategy number three and then after this I'll also share a bonus clip I found of what Warren Buffett would have done if he hadn't become an investor.
So if we look at Buffett's last 60 years at the head of Berkshire Hathaway he's been investing through wars through recessions through crashes and his consistency has won out and even today while being a net seller of stocks if we look at his portfolio he's still mostly invested in solid US companies.
So it's important to be informed and not panicked. Buffett didn't sell all his stocks. He took careful strategic steps to help reduce his risk in the case of a US crash. He's still optimistic, but he's smart enough to hedge against the risks. So, as investors, one of Buffett's biggest gifts to us can be his long-term perspective.
From 1969 to 2026, the advice still applies to stay invested, stay disciplined. And if you want to know more about what's happening in the market right now, YouTube recommends this video next as the best follow-up to this video. My real vocational goal was to be a mattress tester. I mean, that would be a terrific
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