Warren Buffett’s Berkshire Hathaway is sitting on a record $381.6 billion in cash, making it more cautiously invested than ever. Buffett has been selling down holdings and not repurchasing stock, signaling a defensive stance. The S&P 500 is showing signs of overvaluation, with dividend yields near all-time lows and a price-to-earnings ratio of 30, double its long-term average. Economist Robert Shiller’s adjusted P/E ratio indicates the market is even more expensive than traditional metrics suggest. Buffett’s response to these warning signs is to hold cash and reduce positions, advising investors to consider a defensive strategy.

Read more at Nasdaq: History Says the S&P 500 Will Make a Big Move in 2026. Here’s How Warren Buffett Is Preparing.