As the stock god Buffett hoards more and more cash, other investors, despite being in a bull market, cannot help but speculate: Does Buffett know something that others do not?

Berkshire Hathaway (BRK.A.US, BRK.B.US), led by Buffett, currently holds $325 billion in cash and cash equivalents, which is higher in market cap than familiar large companies such as Disney, Goldman Sachs, Pfizer, General Electric, and AT&T. Berkshire Hathaway has also actively sold stocks of two companies in the past few months, namely Apple (AAPL.US) and Bank of America (BAC.US). Moreover, this is the first time in six years that the company has halted buying back its own stock.

Investors' curiosity is not unfounded. Buffett in 1969 mentioned the market being too bubbly and accumulated a large amount of cash in the years leading up to the 2007 global financial crisis. In hindsight, Buffett's actions can be seen as foresight, as the cash hoarded in advance gained substantial returns after the crisis.

Adam J. Mead, a fund manager in New Hampshire and Buffett scholar, said: 'He recognized the fact that markets will fluctuate and go to extremes.'

The increase in stock value does not necessarily mean being on the verge of a collapse or even a bear market. However, elevated valuations may affect the future return on investment for a longer period. Goldman Sachs strategist David Kostin recently predicted that over the next decade, the average annual return rate of the S&P 500 index will be only 3%, less than one-third of post-war levels.

In a time of high investor optimism, David Kostin's report seems 'untimely,' but it is consistent with other forecasts. Vanguard, a large asset management company, recently predicted that over the next decade, the annual return rate range for large US stocks will be 3% to 5%, with the annual return rate for growth stocks ranging from 0.1% to 2.1%.

With the current yield of US Treasury bonds exceeding the expected return rate of stocks, Buffett seems to have taken away as many chips as possible. However, Buffett publicly stated that he is willing to spend this money. At the Berkshire Hathaway 2023 annual meeting, he stated, 'What we really want to do is buy great companies. If we can acquire a company for $50 billion, $75 billion, $100 billion, we can do it.'

The last large-scale acquisition by Berkshire Hathaway dates back to 2010. At that time, Berkshire Hathaway acquired Burlington Northern Santa Fe for $26 billion.

Despite Buffett's extreme caution, individual investors do not need to be overly nervous, because individual investors have more choices.

Vanguard predicts that the average ROI of non-U.S. developed market stocks in the next 10 years will be 7% to 9%, while the ROI of U.S. small-cap stocks in the next 10 years will be 5% to 7% per year. In addition to making highly profitable bets on Japanese trading companies in recent years, Buffett has kept most of his funds in the U.S. and may continue to do so.

However, changes at Berkshire are inevitable, as the 94-year-old man will eventually end his remarkable career.

Berkshire Hathaway now seems unable to continue its long-standing profit distribution scheme. Furthermore, the company is now very large and it is difficult to easily outperform the market. Adam J. Mead believes that Berkshire Hathaway will have to somehow reward investors, possibly through dividends.

This article is reprinted from 'Wind Stock', edited by China Fortune Capital: Jiang Yuanhua.