Berkshire has roughly $374 billion in net liquid reserves, meaning cash and cash
equivalents plus short-term Treasury bills — net of unsettled T-bill purchase
payables. In Q1 2026, it bought back about $235 million of stock — roughly
0.06% of that reserve. That one comparison illustrates the whole issue. It’s
not whether Berkshire has “too much cash.” It’s whether Berkshire can still
deploy or return capital at a scale that matters.

The hard part is that several things have to line up at once. Berkshire doesn’t
just need something cheap. It needs something attractive, high quality, large
enough, available, and executable. Miss any one of those, and the opportunity
probably doesn’t work.

That makes every outlet difficult. Public equities can work — Apple proved that
— but there are very few Apple-sized opportunities where Berkshire can buy
enough, at the right price, in a business it really wants to own. Acquisitions
are harder: you need the right business, the right price, and a willing seller.
Buybacks are more available because Berkshire stock trades every day, but even
there the stock has to be cheap enough, Berkshire has to buy in size, and the
buying itself can’t push the price past the point where it still makes sense.

Dividends are an obvious relief valve, but they still seem unlikely. Berkshire’s
argument has always been that retained earnings can be used better inside
Berkshire than by shareholders on their own. That argument gets harder if the
reserve keeps growing and the other outlets stay blocked, but we are probably
not there yet.

The market backdrop may be part of this too. It may not just be that prices are
high. The market may feel too casino-like — the kind of market where Berkshire
would rather wait. If that’s the case, sitting in T-bills is not necessarily
foolish. It may simply be discipline.

But it’s not free discipline. From 2020 to 2023, Berkshire’s liquid reserve was
roughly $125–165 billion, or about 13–16% of total assets. By Q1 2026, it was
about $374 billion net, roughly 28–30% of total assets. A much larger part of
Berkshire now behaves like a short-term Treasury portfolio. That portfolio is
safe, liquid, and earns real money. But it’s taxable, and it’s not what
Berkshire historically meant by compounding capital.

The other side is that $374 billion of liquidity has power. In a real
dislocation, it’s the ability to act when almost nobody else can. One great
crisis deployment could justify years of waiting.

So the question is whether the waiting eventually turns into action. Optionality
is valuable if it gets used well. If markets reprice, a seller appears, or
Berkshire stock becomes clearly cheap, and the capital still doesn’t move, the
discipline story starts to weaken.

Since we can’t know Berkshire’s internal thinking, we have to watch behavior.
The signals are straightforward: a securities purchase measured in tens of
billions, an acquisition large enough to matter, or buybacks running at
something like the 2020–2021 pace. Any of those would show that price, size,
quality, and opportunity had finally lined up.

Even then, scale still matters. A $30–50 billion deployment would be a real
signal, but it wouldn’t by itself solve a $374 billion reserve. The question is
not only whether Berkshire can act once, but whether it can repeatedly deploy or
return capital at a pace that keeps up with the size of the problem.

That’s why Abel’s capital-allocation test is not whether he should “do
something.” It is whether, when something genuinely sensible appears at
Berkshire scale, Berkshire can still do enough of it to matter.

At $374 billion and growing, Berkshire is not running out of patience. The
question is whether patience eventually becomes its own kind of failure.

Ears

Note: I’m only talking about capital allocation here, not Abel’s full job. He
may create plenty of value by improving Berkshire’s operating businesses. The
narrower question is whether Berkshire can still deploy or return capital at a
scale that moves the needle.