Berkshire Hathaway Inc. (NYSE:BRK) (NYSE:BRK) has amassed a staggering $325 billion cash reserve, its largest ever, and nearly double the previous year's balance. This coincides with a record high in Warren Buffett's favored valuation metric: the stock market's value relative to the U.S. economy. While this may seem like Buffett is predicting an imminent market downturn, his strategy is more nuanced and insightful.

What Happened: Nir Kaissar, founder of Unison Advisors, said in an opinion piece for Bloomberg that Buffett readily admits he cannot forecast short-term market movements or crashes. Instead, he focuses on...