Warren Buffett’s Berkshire Rose 5% in the Market’s Worst Week Since April 2025

Quick Read

• Berkshire Hathaway’s Class B shares gained 5% in the market’s worst week since April 2025 while the company sat on about $365 billion in cash.

• Weeks as bad as this one preceded a higher market a year later 71% of the time, with a median gain of 14%.

• A retiree with $900,000 can borrow the idea by parking three years of withdrawals, about $108,000, in Treasury bills so downturns never force stock sales.

• Building a portfolio and living off one are two completely different skills, and almost nobody teaches the second. This problem is what The Definitive Guide to Retirement Income helps, and it is free today. Read more here. (Sponsor)

The stock market just had its worst week since April 2025. The S&P 500 index fund fell 2.7% from last Friday’s close to this one, dragged down by Thursday’s 4.4% selloff in artificial intelligence stocks. The same week, the Class B shares of Warren Buffett’s Berkshire Hathaway rose 5.2% and set a record closing high on Wednesday.

Berkshire reports its third-quarter results on Saturday morning, and the number most investors will check first is how much cash it is holding. At the end of June it had about $365.5 billion, roughly 29% of the company’s entire market value, according to CNBC.

If you are 67, retired, and have $900,000 saved with 60% in stocks, this week cost you about $14,500. You also collect $2,800 a month from Social Security. Here is what Berkshire’s habit of keeping cash on hand looks like when you apply it to your own savings.

Why Buffett keeps so much cash

Buffett stepped down as Berkshire’s chief executive at the start of 2026 and is now its chairman. Greg Abel runs the company. The cash habit is Buffett’s, and Abel has only started to spend some of it.

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Buffett has explained the idea for decades: cash lets you act when prices fall, and it means you never have to sell something good at a bad moment to pay a bill. Berkshire keeps most of its cash in short-term Treasury bills, which pay about 4.2% today.

The habit has started to pay off. In the second quarter, Berkshire was a net buyer of stocks after 14 straight quarters of net selling, putting nearly $20 billion to work, and it bought back about $4.5 billion of its own shares. Its operating earnings rose 16% to $12.98 billion.

On Saturday, watch two things. Did the cash pile shrink again, which would mean Berkshire is finding things to buy? And was it a net buyer of stocks for a second straight quarter, going into a selloff like this one?

What a week like this has meant before

The S&P 500 index fund has daily prices going back to late 1999, which covers 1,408 weeks. Only 119 of them were as bad as this week’s 2.7% drop or worse.

After those 119 weeks, the fund was higher one year later 85 times, or 71% of the time. The median gain over the next year was 14.3%. The worst result came after a bad week in March 2008, when the fund was still down 47.5% a year later, in the middle of the financial crisis. The best came after March 2020, when it was up 71.6% a year later.

Most of the time, a week like this one was followed by a better year. Some of the time, it was the start of something far worse. Nobody can tell you in advance which one this is, and that uncertainty is exactly what the cash is for.

The retiree’s version of the Berkshire cash pile

You do not need $365 billion to use the same idea. You need enough cash to cover the money you plan to spend over the next few years, so a falling market never forces you to sell stocks at a low.

Here is how it works for the 67-year-old with $900,000:

• Annual withdrawal: 4% of $900,000 is $36,000 a year, or $3,000 a month.

• Total monthly income: $3,000 from savings plus $2,800 from Social Security is $5,800 a month.

• The cash bucket: three years of withdrawals is $108,000, about 12% of the portfolio.

• What it earns: at a 4.21% Treasury bill rate, $108,000 pays about $4,550 a year in interest.

With that bucket in place, a further 20% drop in stocks would knock about $108,000 off the $540,000 stock portion. That is a painful paper loss. It would not change what you spend for the next three years, and it gives the stock portion time to recover before you need to sell any of it.

How to build the bucket without panic selling

The worst way to build a cash bucket is to dump stocks in the middle of a bad week. There are better ways to get there:

• Use the bond and cash portion first. Most 60/40 portfolios already hold more than three years of spending outside stocks. If yours holds $360,000 in bonds and cash, moving $108,000 of it into Treasury bills or a money market fund takes care of the bucket without selling a single share.

• Refill it in good years. In years when stocks are up, sell enough to top the bucket back up to three years. In years when they are down, spend from the bucket and leave the stocks alone.

• Let dividends flow into it. Turning off dividend reinvestment on your stock funds sends that cash straight into the bucket.

Where this plan is weak

Cash is safe, and it has a cost. Over long stretches, stocks have earned more than Treasury bills, so a bigger cash bucket means a smaller long-run portfolio. Three years is a common middle ground. Two years leaves you more exposed to a long slump, and five years gives up more growth.

Treasury bill rates also change. If the Federal Reserve cuts rates, the 4.21% on your bucket will fall, and so will Berkshire’s interest income on its own pile.

The bottom line

Stocks just had their worst week since April 2025, and Buffett’s Berkshire went up while holding about $365 billion in cash, around 29% of its value. When it reports on Saturday, its cash pile will show whether it saw the selloff as a chance to buy. For a 67-year-old with $900,000 and $2,800 a month from Social Security, the same idea means keeping about $108,000, three years of withdrawals, in Treasury bills earning roughly $4,550 a year, so a bad week never turns into a forced sale.

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