Warren Buffett: America's Businesses 'Usually Find A Way'

A cutout of Warren Buffett at the Berkshire Hathaway annual meeting

Warren Buffett, legendary investor and CEO of Berkshire Hathaway, wants everyone to know that he remains a long-term bull on U.S. stocks.

"Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities," Buffett said this in his new annual letter to Berkshire Hathaway shareholders. "That preference won't change."

Buffett appears to be responding to the many news headlines emphasizing Berkshire's growing cash position. Here are a few from the past few weeks:

Why Is Warren Buffett Hoarding So Much Cash? – WSJ

As investors await Warren Buffett's annual letter, is Berkshire Hathaway hoarding cash out of fear — or waiting for an opportunity? – Fortune

Warren Buffett Is Out of Step With Markets. Berkshire Hathaway Keeps Selling Stocks. – Barron's

Warren Buffett's growing cash pile and 3 other things to watch for in Berkshire's investor letter – MarketWatch

Berkshire's cash pile grew to $334 billion in 2024, up from $167.6 billion the year prior.

Buffett acknowledges that the value of marketable equities — companies that continue to trade publicly in the stock market — held by Berkshire declined last year.

But he also takes a more holistic view of Berkshire's portfolio, which includes 189 companies that Berkshire owns. These are companies that don't trade on the stock market like GEICO, Precision Castparts, BNSF, Pilot Travel Centers, Clayton Homes, and Fruit of the Loom.

"While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio," he wrote.

Businesses ‘usually find a way' 💪

Commentators can read into Berkshire's quarterly and annual tweaks however they like.

But Buffett's long-term optimism for American business hasn't changed, which is why he'd rather be invested in stocks over bonds or cash.

"Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance," Buffett wrote. "Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned."

Buffett's comments come as the U.S. debt and deficit — as well as the Trump administration's effort to address it all — dominate headlines. Any development in this area has implications for the dollar, interest rates, and economic activity broadly.

"Paper money can see its value evaporate if fiscal folly prevails," he added. "In some countries, this reckless practice has become habitual, and, in our country's short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency."

Businesses are not totally immune to emerging challenges. But history has shown repeatedly that they are quick to adapt and evolve in their relentless pursuit of growth. (We discussed this in last week's TKer.)

"Businesses, as well as individuals with desired talents, however, will usually find a way to cope with monetary instability as long as their goods or services are desired by the country's citizenry," Buffett said. "I have depended on the success of American businesses and I will continue to do so."

The long game is undefeated 🔭

None of this is to suggest stocks will only go up from here.

Buffett would be the first to tell you he has "not been good at timing" the market.

In fact, one of his most bullish essays, a New York Times op-ed titled "Buy American. I Am," came just before the S&P 500 fell another 26% before the market bottomed in March 2009.

But the thesis of his piece ultimately held, and those who bought U.S. equities at the time did extraordinarily well in the years to follow.

The American brand of capitalism Buffett promotes isn't just about how companies are able to come up with great goods and services. Rather, it's about how they are unmatched at overcoming what often appear to be insurmountable challenges.

While investors should always brace for short-term volatility, they should also stay focused on the long game, which remains undefeated.