Is Berkshire Hathaway Still the Smartest Investment Move in 2025?
Warren Buffett's legendary conglomerate faces its toughest test yet in the digital age.
While traditional investors cling to Berkshire's historical performance, crypto natives see a different story unfolding. The Oracle of Omaha's aversion to technology plays looks increasingly outdated as blockchain assets outperform traditional holdings quarter after quarter.
Berkshire's massive cash position—once praised as prudent—now looks like opportunity cost in a world where digital assets generate triple-digit returns. Meanwhile, Buffett's famous 'buy what you know' philosophy seems downright quaint when decentralized finance protocols offer transparent, real-time yield generation without the middlemen.
The real question isn't whether Berkshire is a good investment—it's whether any traditional equity can compete with the asymmetric returns of properly deployed digital assets. Sometimes the smartest move isn't following the legend—it's recognizing when the game has changed.
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A rock-solid balance sheet with a war chest of cash
Berkshire's latest quarter underscores the point. In the second quarter of 2025, operating earnings were about $11.2 billion, down 4% year over year. But this was up against a very tough comparison, when operating earnings rose 15% in the year-ago quarter. In the second quarter of 2025, insurance investment income remained a bright spot thanks to higher short-term rates. Insurance float -- the pool of policyholder funds Berkshire invests -- ended the quarter NEAR $174 billion, up about $3 billion from the end of 2024. Management noted that investment income is being driven by a policy of holding more Treasury bills -- a low-risk capital allocation choice that adds ballast when markets wobble.
Liquidity is where Berkshire stands apart. As of June 30, the company held roughly $340 billion in cash, cash equivalents, and U.S. Treasury bills across its businesses. Management continues to emphasize that financial strength and redundant liquidity will always be of paramount importance.
A favorable risk-to-reward profile
What makes Berkshire compelling today is how the pieces fit together for investors. The diversified earnings base and conservative balance sheet help mitigate downside risks, while the stock portfolio and operating businesses offer upside potential. Of course, one risk is if short-term yields decline from here, Berkshire's interest income on that cash hoard will fall. But lower rates WOULD also tend to support equity values and financing conditions for operating subsidiaries, which helps balance the picture.
Valuation looks reasonable for what you get. Berkshire trades at a price-to-book multiple of about 1.6, squarely within a band that has often produced solid long-term outcomes for Berkshire shareholders. That multiple isn't cheap. But you're paying for a collection of resilient businesses, a massive equity portfolio currently valued at more than $300 billion, and a manager who has repeatedly shown he'll act when the odds are favorable.
Of course, Berkshire's pile of cash does more than help add downside protection; it also provides optionality. Indeed, the optionality from its excess cash is arguably the most important part of the investment thesis for the stock. Warren Buffett has been explicit that Berkshire will wait for truly attractive opportunities and then MOVE decisively. That patience can be hard to sit through when markets are roaring. But for a core allocation, it's precisely the temperament investors want.
Stepping back, Berkshire may not be the top-performing stock of the next five years. That isn't the bar. As a foundation for a broader portfolio, few companies combine resilience, breadth, and flexibility this well. The cash provides offense when markets sell off. The diversified collection of operating businesses provides steady cash FLOW for the conglomerate in most environments. And the stock's reasonable valuation leaves room for upside as earnings compound over time.
For investors aiming to improve the overall risk-to-reward profile of their portfolio, Berkshire Hathaway may truly be the smartest investment you can make today.
