The S&P 500 has seen a 17% increase in 2025, marking the third consecutive year of double-digit gains, totaling an 83% increase over three years. Warren Buffett and his team have been net sellers of stocks for the past 12 quarters, with Berkshire Hathaway’s cash pile reaching nearly $392 billion, its highest ever.

Buffett’s strategy emphasizes staying in the market for long-term compounding growth, but he has been cautious in recent years, selling more stocks than buying. With the market at expensive valuations and a high cyclically adjusted P/E ratio, Buffett sees limited opportunities for undervalued stocks that align with his value investing approach.

As the market shows signs of a potential bubble, Buffett’s advice is to be selective with valuations and avoid overpaying for stocks to prevent future drops. Maintaining cash reserves allows investors to capitalize on buying opportunities when stocks dip, following Buffett’s principle of staying in the market under most circumstances.

Investors should heed Buffett’s caution and be prepared for market volatility. Having cash on hand to purchase stocks during downturns can lead to significant gains in the long run. The Motley Fool Stock Advisor team has identified 10 top stocks for investors to consider, excluding Berkshire Hathaway, with the potential for substantial returns.

Read more at Yahoo Finance: As 2026 Gets Closer, Warren Buffett’s Warning Is Ringing Loud and Clear. Here Are 3 Things Investors Should Do.