| His cash pile is a bit worrying though. Here's perhaps the smartest long-term investor of all-time running a company with a $1 trillion market cap, keeping $300 billion of that in cash. That's not just about Buffett taking no duration risk, it's about Berkshire actively selling assets and stashing the proceeds in cash — as if there's a major correction coming. I know Buffett is supposedly not a market timer, but how else can we read this? He's voting with his money against taking more risk in all long-lived assets. And while his company is so huge that he has to move much sooner than any of us do since any asset sales he makes would move markets tremendously against him in volatile times, he's still telling us that future returns may be sparse. Valuations are extremely high. After falling with the Fed's tightening campaign, the cyclically adjusted price/earnings ratio is back to levels that are only topped by the dotcom bubble. As they say, future returns are dependent not just on the quality of what you buy but at what price you bought it. The higher the price, the less room for upside. Still, it's hard to expect stocks to fall out of bed when we are looking at continued economic growth. Plus, this economic growth is translating into earnings growth. My Bloomberg colleague Gina Martin Adams, Bloomberg Intelligence's Chief Equity Strategist, says that 90% of the S&P 500 have reported this quarter. And earnings growth for the third quarter looks to be on track for 8%. That suggests now is simply not the time to do what Buffett is doing and make a huge change in asset allocation. I look at his moves as predictive of the medium term for a low return future. But, it's not necessarily evidence that he expects a market crash. Buffet's move to cash is not something that the average investor should replicate. In the end, we're still looking at a stronger economy for the foreseeable future. That means higher inflation too. And higher inflation translates into fewer rate cuts and higher yields. If you're taking maturity risk out to two years, you'll be just fine. Five years might work too. But it's riskier. That higher nominal growth has already meant higher profits for S&P 500 companies and will continue to do so, buoying stock prices. Personally, I am skeptical of the "small cap" Trump Trade, as if a Trump presidency will be better for smaller companies than the Amazons and Apples of this world. If anything, I would expect the opposite given the better ability of large firms to deal with higher costs. At a minimum though, there's no reason to reallocate your equity portfolio meaningfully at this time. All of those gambits are purely speculative. The index is likely to do as well as any other strategy. And that's dominated by megacap tech Of course, then there's Bitcoin. It's taken off like a rocket ship. And while that move is just as speculative as the other Trump Trades, it is also representative of a what is almost certainly going to be a more relaxed regulatory environment. Of all the Trump Trades outside of Treasuries, this is the one that I think is most promising and most emblematic of the euphoria associated with financial conditions loosening. Think of Bitcoin circa 2024 as Yahoo circa 1999 to Nvidia's Cisco. With the AI investment spree really benefitting large incumbent players the most, crypto is where the mania turns for high beta financial assets. And Bitcoin will benefit. I continue to be bullish, but cognizant that smart investors are already sensing things are overpriced. If risk assets go higher from here as I suspect they will, the prospective future returns will diminish. And an eventual crash cannot be ruled out — though that looks a way's off. | 
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