David Einhorn Just Issued a Stark Warning to His Investors (Another Billionaire Joining Buffett?)

Let’s play a little game of make believe for just a second. 

You’re in a casino (because, let’s be real, the stock market feels exactly like one right now), and you spot Warren Buffett, aka the Oracle of Omaha, casually cashing in his chips and running toward the exit. At the same time, everyone else is still glued to the blackjack table, going full YOLO on what looks like a winning streak. But Buffett? He’s got a record $189 billion in cash stacked up, probably stuffed into a few duffle bags on his way to the parking lot. The message here? Maybe it’s time to grab your winnings and get the hell out before the house cleans you out.

That’s the vibe billionaire investor David Einhorn is picking up on. In his latest quarterly letter from Greenlight Capital, Einhorn laid out what we’re all secretly thinking: The stock market is looking way too frothy, and even non-tech stocks are getting priced like Coldplay fan merch at a concert in England. 

(Source: CNBC)

Einhorn isn’t exactly screaming “bubble!” from the rooftops, but when Warren Buffett is selling off large chunks of his portfolio and holding onto more cash than a bank vault in Gotham, it’s worth paying attention.

Einhorn points out that even old-school, non-tech stocks are trading at absurd multiples (30 to 50 times earnings). And it's not just tech companies with their nosebleed valuations. Nope, even industrial giants like Caterpillar and consumer staples like Procter & Gamble are being priced like they’re launching the next iPhone. I mean seriously, would you pay $15 for a McDonald’s Happy Meal? (it might fill you up, but are you really getting your money's worth?). That’s the market right now, where even companies that build tractors or sell toothpaste are being treated like tech unicorns.

Historically, when Buffett starts hacking away at his positions and building up cash reserves, it’s because he’s seen this movie before. In 1969, when the market was bubbling with speculative investments, Buffett shut down his investment partnership, citing the market was overpriced and good deals were harder to find than a cheap New York City apartment. 

Then, in 1987, just before the Black Monday crash that wiped out 22% of the market in a single day, Buffett was quietly selling off chunks of his portfolio. As Greenlight Capital put it, “One could argue that sitting out bear markets has been the underappreciated reason for his outstanding long-term returns.”

So what’s the takeaway? Warren Buffett might not be outright predicting a crash, but he's certainly playing it safe by pulling back from the market. With a record cash pile, he’s getting ready for a rainy day, while the rest of the market seems to think the sun’s never going to set.

Greenlight Capital’s conservative positioning is a clear signal: they’re minimizing their exposure to riskier equities and even betting on alternatives like gold. This doesn’t mean the market’s in full-blown bubble mode—yet. But it’s looking eerily similar to previous high-water marks like the dot-com bubble and the 2008 crash. The CAPE ratio (the cyclically adjusted price-to-earnings ratio) is flashing red lights, showing the market is more expensive now than before the Great Recession.

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Stock.News has positions in P&G and McDonald’s.