As merger and acquisition (M&A) activity has roared, Warren Buffett and his investing colleagues at Berkshire Hathaway have stayed on the sidelines.
That means they missed out on an M&A bonanza that saw a record-breaking $2 trillion in deals through mid-May. But it also means Berkshire Hathaway has set a record of its own: It now has the biggest cash balance in the firm’s storied history.
While that can be construed as good news for Buffett & Co. — since they have a veritable war chest of capital ready for deployment — it carries far starker implications for the overall market.
That’s because Berkshire Hathaway’s reluctance to buy anything can be viewed as a signal that just about everything is too expensive. And considering Buffett is one of the most successful investors in history, his market behavior should watched closely.