If you are still bullish on risk assets like me, you should be cheering on US stocks, plain and simple. Hey, not everyone is a bull on Wall Street. Prominent Billionaires such as Jamie Dimon of JP Morgan and Warren Buffett of Berkshire Hathaway have recently signaled that the market is overvalued and may be due for a sharp correction.
From what I have picked up from the mainstream sources. Mr. Dimon has said that he is cautiously pessimistic about the outlook for markets and the economy, given the rising geopolitical tensions and risks as well as inflation remaining quite sticky.
In fact, he has previously said that he would not be surprised if interest rates soar into the high single digits, which would likely pose enormous problems for both the economy and the US fiscal situation.
Meanwhile, Warren Buffett is also signaling that the market may be overvalued by allowing Berkshire’s cash stockpile to reach a record high of USD189 billion, and is rapidly closing in on USD200 billion. The reason he has given for letting the cash pile grow so large is that there is a lack of attractive alternative investments for him that would move the needle for Berkshire Hathaway.
While billionaires like Warren Buffett are becoming increasingly cautious and when I see people suggesting that stocks like NVDA could triple or even increase tenfold from their current value, it signals to me that we might be approaching a point where it is time to be cautious, as bullish sentiment is becoming excessively optimistic.
Still, I’m not running for the hills and even bull markets can experience significant corrections. I should remind you now that I’m talking about investing, not leveraged trading. I’m supposed to make a big deal out of Warren Buffett’s huge pile of cash. If you are a fan of Warren Buffett, his record USD189 billion cash pile is not a market-crash signal.
His opportunity set is expensive due to the massive size of Berkshire Hathaway. Well, take it from Buffett himself. When asked “what is Buffett waiting for?” with regards to Berkshire’s cash pile, the legendary investor responded, “We only swing at pitches we like.”