Despite the late 2024 and 2025 filings revealing The Oracle of Omaha, Warren Buffett, has far from abandoned U.S. stocks, traders have been watching his growing cash pile with a nervous eye.
The legendary investor’s latest shareholder letter, as it turned out, equally gave cause for calm and for alarm. Indeed, Buffett, in no uncertain terms, stated that Berkshire Hathaway (NYSE: BRK.A, BRK.B) continues to prefer equity over paper money.
Furthermore, he hasn’t given up on his broader ‘never bet against America’ stance, though he also hasn’t been as vocal about it, having, despite his praise for the capitalist system, admitted that abuses are in many ways at their historical highs, according to the most recent letter.
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This system is called capitalism. It has its faults and abuses – in certain respects more egregious now than ever – but it also can work wonders unmatched by other economic systems.
Why Buffett is wary of paper cash
Part of Buffett’s reasoning behind the preference for equity, however, is rather alarming as he talked about ‘fiscal folly’ that the U.S. is seemingly tethering on the edge of:
Paper money can see its value evaporate if fiscal folly prevails. 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.
Though relatively vague, the warning appears especially pointed considering the historical and contemporary examples from countries such as the Weimar Republic, where inflation peaked at 29,525% in 1923, FR Yugoslavia, where it peaked at 3.13 billion percent in 1994, and Argentina, where it hit a 32-year high at 211% in 2024.
The inflation rate in the U.S. clearly is substantially lower than the most extreme examples and saw its historical peak at a still-moderate 23.7% in 1920, though some rough estimates assert it is plausible it rose almost as high as 30% in 1778.
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On the other hand, the last five years have been difficult for the American consumer, with the inflation calculator provided by the Bureau of Labor Statistics showing that $100 from January 2020 had an equal value to $123.14 from January 2025.
The situation is made worse by the fact that the latest CPI reading came in hotter than expected at 3% at a time when inflation is expected to continue rising amidst the tariff shocks and there is little certainty about the measures the government will take.
Indeed, the Fed appears to favor a continued pause to interest rate cuts, while President Donald Trump voiced his support for additional reductions.
Finally, for all the uncertainty, it is worth remembering that Buffett’s letter, though cautionary, is far from alarmist or implying an imminent collapse like some other prominent investors — ‘Rich Dad Poor Dad’ author Robert Kiyosaki perhaps most notably — have taken to doing with increasing frequency.
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