Although Charlie Munger passed away in 2023 and Warren Buffett stepped down from the CEO chair in 2025, Berkshire Hathaway (NYSE: BRK.B), new CEO Greg Abel has yet to make any meaningful strategic decisions of his own so far. According to CNBC, Berkshire closed out 2025 still flush with $373 billion in cash and equivalents. Aside from acquiring Oxychem for $10 billion, Berkshire has been actually unloading stocks from its portfolio for the past 3 years, with hefty millions of Bank of America (NYSE: BAC | BAC Price Prediction) and Apple (NASDAQ: AAPL) shares at the forefront.
A longtime proponent of the S&P 500, Buffett has often cited the Vanguard Total Stock Market ETF (NYSE: VTI), among others, as idiot-proof solid investments that would reliably deliver, for the most part, double digit annual returns. Oddly out of character for Buffett, he didn’t follow this advice during Berkshire’s portfolio-shedding years, despite the S&P consistently closing out in the black every year since 1926.
Perhaps it was disillusionment with the dismal performance of his expensive Kraft Heinz (NASDAQ: KHC) deal. Perhaps it was unease with Apple’s overreliance on foreign manufacturing risk. Perhaps it was CEO Brain Moynihan’s problems with getting Bank of America on track to be compliant with Basel III international banking statutes. Whatever the reason, Berkshire took a decidedly cautious outlook towards the market and started loading up on cash. When the Magnificent 7 stocks began exhibiting more volatility in Q1 2025, some praised Buffett’s foresight in his skepticism of tech sector overvaluation as 2024 ended.
Buffett Hasn’t Always Practicing What He Preached
Although Warren Buffett’s support for the S&P 500 and US market at large is long standing, he hasn’t always done so well when he backed away to accumulate cash warchests.
Nevertheless, VTI continued to gain solidly, outperforming BRK.B in 2023 (VTI: +21.96 vs. BRK.B: +11.72%) and in 2025 (VTI: +14.05% vs. BRK.B: +8.0%), according to Total Real Returns. This scenario is not unprecedented. In the previous three periods of Berkshire cash consolidation, VTI has surpassed it – perhaps giving credence to Buffett’s S&P advice and the maxim that “doctors often make the worst patients”.
- 1998-1999: Berkshire (+50.28%) surpassed the S&P 500 (26.65%) in 1998, to then turn 180 degrees in 1999, with a (-24.17) loss vs. the S&P 500 posting +17.25, according to Barron’s.
- 2005-2006: The S&P 500 (+19.5%) surpassed BRK.B (+14.8%) over the 24 month period to year-end close.
- 2018-2019: Perhaps Berkshire’s worst head-to-head comparison against the S&P 500, which outperformed Buffett’s company by 37% over the total period, according to CNBC.
VTI – For Those Keeping To Buffett’s Advice Over His Actions
The Vanguard Total Stock Market ETF checks all of the boxes for Warren Buffett’s ETf criteria: large market index, low-cost, and solid long-term performance track record.
While a case can be made for Berkshire hoarding cash for other private sector acquisition opportunities, its performance has statistically faltered during these periods. Greg Abel has not yet publicly identified any new deals, apart from a closing a previously agreed to one for insurance company Tokio Marine for $1.8 billion.
Warren Buffett has touted the benefits of low cost index funds, especially those tracking the S&P 500 and the US market, for many years. He even won a $1 million bet that the S&P 500 would outperform a managed fund by Protege Partners over a 10-year span.
Given that Vanguard Total Stock Market ETF has 0.03% expense ratio and boasts 3,700 stocks, it certainly fits the Buffett profile.