Mar 18

Be Fearful When Others Are Greedy, And Greedy When Others Are Fearful

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Is Warren Buffett waiting for the Next Big Elephant?

Is there more room for A.I. to grow, or is the A.I. bubble about to burst?

Warren Buffett is known for his disciplined approach to cash management, often holding large amounts of cash when he believes valuations are high and economic risks are rising. 

Were you prepared for the Feb-Mar 2025 market correction like Buffett was?

Here are several instances where Buffett (through Berkshire Hathaway) maintained significant cash reserves before major economic downturns:

1969 - 1970 Bear Market

  • Buffett liquidated Buffett Partnership Ltd. in 1969, citing overvaluation in the market.
  • He returned capital to investors and kept Berkshire Hathaway’s focus on cash and defensive assets.
  • The market subsequently declined sharply in the 1970–1971 bear market.

1987 Stock Market Crash ("Black Monday")

  • In the years leading up to the 1987 crash, Buffett was cautious about high market valuations.
  • Berkshire Hathaway held significant cash reserves and was in a strong position when the crash occurred.
  • He used the downturn as a buying opportunity rather than suffering major losses.

1999–2000 Dot-Com Bubble

  • During the late 1990s, Buffett avoided investing in tech stocks, citing their speculative nature.
  • Berkshire Hathaway built up significant cash reserves instead of chasing internet stocks.
  • When the bubble burst in 2000–2002, Buffett was well-positioned to deploy capital into undervalued businesses.

2007–2008 Global Financial Crisis

  • In the years leading up to the crisis, Buffett was vocal about risky financial practices in housing and derivatives markets.
  • By 2007, Berkshire Hathaway had $44 billion in cash, waiting for opportunities.
  • As the crisis unfolded, Buffett deployed cash into Goldman Sachs, Bank of America, and other distressed companies at highly favorable terms.

2019–2020 COVID-19 Market Crash

  • By the end of 2019, Berkshire Hathaway was holding $128 billion in cash, a record amount.
  • Buffett cited a lack of attractive investment opportunities due to high market valuations.
  • When the COVID-19 crash hit in March 2020, Berkshire initially hesitated to make large purchases, but the cash cushion protected the company.

2022–2023 Market Volatility (Post-Pandemic Inflation & Rate Hikes)

  • In 2022, amid rising inflation and Federal Reserve interest rate hikes, Buffett again built up cash reserves.
  • Berkshire had over $144 billion in cash by early 2023.
  • He selectively deployed cash into undervalued energy stocks, Occidental Petroleum, and Japan’s trading firms.


Buffett’s strategy has consistently followed the principle of “Be fearful when others are greedy, and greedy when others are fearful.” Holding large amounts of cash before economic crises has allowed him to capitalize on market downturns by acquiring undervalued assets at bargain prices.

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