Warren Buffett hasn't stockpiled this much cash since right before the financial crisis

(Image credit: JOHANNES EISELE/AFP/Getty Images)

published 28 August 2019

Uh oh.

Warren Buffett, known for being one of the world's most prescient investors, has kept quiet on whether U.S. equities are too expensive at a time when the global economy is slowing, Bloomberg reports. But he's reportedly hoarding a record $122 billion in cash at Berkshire Hathaway Inc., leading to some speculation that he sees a recession on the horizon, or at least is sending some sort of warning. The cash pile is more than half the value of Berkshire's $208 billion portfolio of public companies, and the only time that percentage has reportedly been higher since 1987 was in the years leading up to the 2008 financial crisis.

Bloomberg also points out that Buffett's favorite gauge of the stock market, the market capitalization-to-GDP ratio, doesn't paint a pretty picture at the moment. The barometer, which measures the total value of the stock market as a percentage of GDP, was reportedly telling before the last two economic downturns. It shot up 146 percent at the peak of the dot-com bubble in 2000, and 137 percent just before the financial crisis in 2008. It reportedly hit 154 percent in 2017 and Bloomberg reports that it's almost certainly higher today since the U.S. stock market is up. If it wasn't clear already, the lower the ratio, the better.

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Tim is a staff writer at The Week and has contributed to Bedford and Bowery and The New York Transatlantic. He is a graduate of Occidental College and NYU's journalism school. Tim enjoys writing about baseball, Europe, and extinct megafauna. He lives in New York City.

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