It Has Begun: Warren Buffett Just Sounded the Alarm — Most Will Regret Ignoring It

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Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 1:11Speaker 01

  Berkshire Hathaway has the most cash it ever has on hand. Is that like an indicator that, you know, the most successful investors like, I'm going to take a step back for a second.

• 1:20Tom Bilyeu?

  He is sending you a signal that bad things are going to happen to the stock market in the short term. So keep in mind, Warren Buffett's job is to yield an annual return. He's got to think about his shareholders. He is in every minute detail of the stock market. And so you will see over time, he has pulled cash out, put cash back in. The odds that this is very similar to a 1999 dot com bubble are extremely high. The catch is you'd still make an unfathomable amount of money. If you just were diversified across all the dot com stocks in 1999, rode out the bubble bursting and just let all of it climb back up.

• 2:03Tom Bilyeu?

  And if you're a dollar cost averager, which I advise you to be, then you would just be doing that. Oh, look, everything's on discount because of the last. 200 years. 6.5% over inflation is what a well diversified set of stocks has yielded. I am not the person for day traders to pay attention to. Go look at all the quants and all those guys. And if you want to take that risk and you think you're that smart, go for it. Yes, Warren Buffett is telling you that you're in for probably several years of trauma and turmoil. But if you're invested for 25 years, 50 years, 60 years, what does it matter? All of these blips are going to come and go. Understand the nature of the thing and you will be fine. If you steer by emotion, you are going to lose your fucking money.

• 2:47Speaker 02

  Warren Buffett is stockpiling cash because he's not able to find good investments or long-term scale projects anymore.

• 2:53Tom Bilyeu?

  Yep, I think right now that is a very reasonable thing for somebody that has to yield an annual return for shareholders. For sure. Now, just keep in mind, he has done this before. This might be the time where he's done it. It's 20% bigger than he's ever done it. But he's done this many times before where he doesn't think there's any deals in the market. He sees instability here, there, somewhere. Just be careful. If you're not Warren Buffett and you are not spending every day reading shareholder reports and all of that stuff, the odds that you're able to do what he does and get the returns that he's going to get are zero. Far better to play the game that's worked for 200 years for the average person, which is just stay in the market. Don't put money in there that you need to touch in the next 25 years. Don't put your grocery money there. Make sure that you have plenty of money in cash.

• 3:39Tom Bilyeu?

  I keep years of money in cash on hand because, hey, who knows? Now, I'm, when you take it at a raw dollar amount, the amount that I lose in potential upside on having years worth of cash at my lifestyle is a lot. But I do it so that I don't have to worry. If the economy went into a multi-year recession, I wouldn't even have to think about it. But it gives me plenty of time to react. So I'm just saying, I think it is wise to put yourself in that kind of position.

• 4:07Speaker 02

  Buffett used to say that he never sells. But now he's sold and holding cash. This is a different behavior. Big signal to everyone else that is being ignored.

• 4:16Tom Bilyeu?

  Yep. Whenever somebody makes a statement, myself included, what they are saying is, right now, with the way things are and the things that I know now, this makes sense. But if you try to pull something that he might've said 20 years ago and apply it to today, that doesn't make any sense. He's not trying to be dogmatic. He's trying to get a return for shareholders. Once you understand that, the man has to get an annual return for shareholders. I don't care how good of an investor you are. You start doing three, four years of not sufficient returns, especially when other people are getting bigger returns, people in your community are going to turn against you. If you live in an inflationary environment, you must find a way to beat the punishing effects of that inflation. If the stock market just absolutely gets obliterated and banks are folding, guess what they're gonna do?

• 4:58Tom Bilyeu?

  They're gonna print more money. And so if you have all of your money in cash, you are fucked. There's no other way to say it. Your money will literally go to zero. Very bad things can happen. And the thing that separates people is, do you own assets or not? And you should be mad as hell that you're being forced to gamble in the stock market. But you have to gamble because the reaction to every bad thing in the market is going to be to print money. When you really just get to the raw mechanism of how this works and why, unfortunately, everybody is forced to gamble in the stock market, you will understand, like, black markets spring up for a reason. If you really hyperinflate a currency, the following would be brilliant.

• 5:41Tom Bilyeu?

  You buy a whole bunch of freezers, because now at least your money is in a freezer, and it's not like the freezer has the value that the freezer has. And then you go to the grocery store and you buy a bunch of things that you can freeze, and then you sell it to people and you change the price every hour. That would be a brilliant use of capital. What isn't a brilliant use of capital is leaving it in the bank, is investing in assets when you need the money right now. These are all terrible fucking ideas. If we actually hyperinflate the US dollar, my advice to people is not gonna be, "Hey, keep dollar-cost averaging into the stock market." It's gonna be like, "Okay, what can you do right now to make sure that your family can eat?" Buffett is in a different place. He's gonna react differently. Because A, he's got asymmetric knowledge. He's also, he's like 170. So he's gonna have a different lens on life.

• 6:26Tom Bilyeu?

  He's already trying to pass the baton to the next person. So it's like, all of that is gonna influence. It is a data point. It is a data point to read well. It is a data point that tells me the stock market is not going to be a great place to be in the short term.

• 6:40Speaker 02

  We've got a counter argument. Tom, you're missing the biggest piece. The yield curve inversion, Buffett pulling billions and asset prices at inflated highs. These aren't random. They're the classic setup for a crash. You say invest in assets, but doing that before what could be the worst crash in 90 years would be unrecoverable. The yield curve, Buffett's moves and inflated highs all point to one thing, a reset.

• 7:02Tom Bilyeu?

  If what you are saying is you are better off keeping your money in cash, staying out of the stock market, waiting for it to basically go to zero. You're calling it a reset, all the companies washing out and then we build back. And so just wait and see if that happens. Cool. We have registered your advice. It is fucking terrible advice. My advice is very simple. Don't put money into the stock market that you need back in less than 10 years for sure. Probably 25 is the right way to think about it. If that happens, money printer go burr so hard, so fast. You will hyperinflate the currency. It will be the death of America as we know it.

• 7:46Tom Bilyeu?

  So I don't know what you're actually advising people to do. Live below your means. You must be in assets in an inflationary environment. Don't put money in that you need right away. Make sure that you always have cash on hand. Be nimble enough that if things really do go to hell in a handbasket, that you have a plan. If America shows signs of collapse like that, I'm on the first private, private flight to Abu Dhabi. It just is. I'm going to Singapore. I'm going where it's warm and no mosquitoes at like that just there it is. If you think this is all going to reset, guess where the worst place in the known universe would be? Cash. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens.

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• 9:10Tom Bilyeu?

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