Super-Rich Investors Stockpiled Record Cash in February; Four Months Later, U.S. Stocks Hit New Highs—Who’s Proving Whom Wrong?
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Super-Rich Investors Stockpiled Record Cash in February; Four Months Later, U.S. Stocks Hit New Highs—Who’s Proving Whom Wrong?
The wealthiest individuals’ hedge bets have been proven wrong by the market.
Navigating Web3 tides with focused insightsAuthor: Claude, TechFlow
TechFlow Introduction: In February this year, U.S. money market fund assets surged to a record high of approximately $8.25 trillion. Meanwhile, Warren Buffett—on the verge of retirement—held $381.7 billion in cash, fueling widespread speculation that ultra-wealthy investors were exiting the stock market.
But by June, the narrative has flipped: The S&P 500 has hit successive all-time highs, breaking above 7,600 points for the first time on June 2, while money market fund assets have declined to $7.87 trillion as of June 10—meaning capital is flowing back into equities from cash. The “safe-haven” bet made by the wealthiest investors has, for now, been proven wrong by the market.
The February Story: Cash Holdings Hit Record Highs Among the Wealthy
Let’s rewind to the start of the year.
According to a Goldman Sachs survey conducted in October 2025, high-net-worth individuals (HNWIs) with over $1 million in investable assets held, on average, about 20% of their net worth in cash and cash equivalents—a proportion higher than traditional asset allocations.
The most emblematic example is Warren Buffett.
Per Bloomberg, Berkshire Hathaway’s former CEO—who retired on December 31, 2025—had built up the company’s cash reserves to roughly $381.7 billion by the end of Q3 2025. This cash pile even generated returns: Despite market turbulence, Buffett’s personal net worth grew by approximately $21 billion last year.
He wasn’t alone in reducing equity exposure. According to holdings disclosures reported by Reuters, Peter Thiel—PayPal co-founder and founder of hedge fund Thiel Macro—sold around $100 million worth of NVIDIA shares in Q3 2025. NVIDIA’s stock rose nearly 35% in 2025; Thiel’s exit near the peak further stoked concerns about an “AI bubble.”
The broader market trend pointed in the same direction. Per data from the Investment Company Institute (ICI), U.S. money market fund assets reached a record $8.25 trillion at the end of February—up 65% from ~$5 trillion in 2022. At the time, the prevailing narrative was clear: “Smart money” was rushing into cash.
The June Reversal: Capital Is Flowing Back Into Equities From Cash
The question is: It’s now June—and the story has reversed.
Per official ICI data, money market fund assets fell to $7.87 trillion for the week ending June 10—a weekly outflow of $21.48 billion. Earlier, on June 4, the figure stood at $7.89 trillion. From the February peak of $8.25 trillion, assets have shrunk by roughly $380 billion—capital is exiting cash, not entering it.
Where is it going? Equities. According to CNBC, the S&P 500 closed at 7,609.78 on June 2—the first time ever above 7,600—and extended its winning streak to nine consecutive days; the Nasdaq simultaneously hit new highs. Following NVIDIA’s launch of its next-generation PC chips, its stock jumped over 6% in a single day, lifting Dell and HP along with it. In short, the capital that fled to cash in February is now watching—helplessly—as markets scale new heights without it.
Beneath this reversal lies a signal long flagged by analysts. As reported by investingLive, Bank of America (BofA) warned at the end of May that, amid surging markets and peaking bullish sentiment, cash levels were already declining. The $8.25 trillion record was old news by February; by June, the landscape had fundamentally shifted.
The Cost of Hoarding Cash: Underperformance vs. Stocks by More Than Double
Why does this “safe-haven” move look increasingly misguided? Returns tell the story.
Per calculations by The Motley Fool, holding the S&P 500 since early 2022—just before the bear market began and when cash was being moved into money market funds—would have delivered total returns of ~42%. By contrast, the Vanguard Federal Money Market Fund returned only ~18% over the same period—a gap of more than double. Hiding in cash may feel safe—but the price is missing a major rally.
This is precisely why many analysts remain skeptical of the “sell-and-go-to-cash-at-the-first-sign-of-volatility” approach:
Historically, geopolitical conflicts and similar events tend to be short-lived—and often present buying opportunities at attractive valuations, rather than reasons to liquidate positions entirely.
Where Did the Equity-Selling Wealthy Put Their Money?
Those wealthy investors who did reduce equity exposure didn’t leave their capital idle. A Goldman Sachs survey found that nearly 40% of individuals with $1–5 million in investable assets hold alternative investments; among those with over $10 million, the share jumps to 80%. The wealthier the investor, the more they diversify beyond traditional equities.
Art is one destination. Per UBS’s 2025 Art Market Report, high-net-worth collectors allocated roughly 20% of their wealth to art in 2025. Real estate, private credit, and hedge funds are also absorbing capital flowing out of equities. The logic is simple: In an environment marked by persistent inflation, elevated interest rates, and uncertain tariff outlooks, these asset classes function more like safe havens. Yet, as the earlier return comparison shows, such havens come with trade-offs.
Wall Street Doubles Down: Goldman Sachs and Morgan Stanley Raise Targets
If the wealthy acted defensively in February, Wall Street’s posture in June is decisively bullish.
Per Bloomberg, Goldman Sachs strategists—led by Ben Snider—raised their year-end S&P 500 target from 7,600 to 8,000 at the end of May, citing AI-driven earnings growth. Goldman raised its 2026 S&P 500 EPS forecast to $340—a 24% year-on-year increase—and expects AI infrastructure beneficiaries to contribute roughly half of the index’s earnings growth this year. Still, Goldman added a caveat: “AI sentiment and interest rates pose risks in both directions.”
Morgan Stanley went even higher. Lisa Shalett, Chief Investment Officer of Morgan Stanley Wealth Management, set a 12-month S&P 500 target of 8,300 in her May 20 outlook—implying ~11–12% upside. She also listed five key risks: excessive concentration of gains among a handful of large-cap AI stocks; deteriorating U.S. consumer finances; corporate profits driven by price hikes—not productivity gains; pressure on long-term yields; and stronger performance outside U.S. equities (notably Japan and select emerging markets). Shalett’s core view: “Markets appear stronger than the underlying economy.”
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