Super billionaires hoarded cash to a record high in February, and four months later, the U.S. stock market hit a new high. Who's proving whom wrong?

Author: Claude, Deep Tide TechFlow

Deep Tide Guide: This February, U.S. money market funds surged to an all-time high of about $8.25 trillion. Before Buffett retired, he left behind $381.7 billion in cash, and for a time it was widely rumored that ultra-rich investors were withdrawing from the stock market.

But by June, the plot has reversed: the S&P 500 keeps hitting record highs—on June 2 it broke 7,600 points for the first time—while the size of money market funds fell back to $7.87 trillion as of June 10. Money is flowing out of cash streams and back into the stock market. The safest haven that the wealthiest investors are betting on has been slapped by the market.

The February story: the wealthy’s cash pile hits a historic high

First, let’s rewind to the beginning of this year.

According to a Goldman Sachs survey in October 2025, among high-net-worth individuals with investable assets of more than $1 million, they average about 20% of their net assets held in cash and cash equivalents—a proportion that is relatively high compared with traditional allocations.

The most iconic example is Buffett.

According to Bloomberg, the former CEO of Berkshire Hathaway, who retired on December 31, 2025, had built the company’s cash reserves to about $381.7 billion before retiring, with the timing being the end of Q3 2025. This cash also kept earning money—despite market turmoil, Buffett’s personal net worth still increased by about $21 billion last year.

Not only him. According to Reuters disclosure of holdings, PayPal co-founder Peter Thiel, through the hedge fund Thiel Macro, sold about $100 million worth of Nvidia stock in Q3 2025. Nvidia rose nearly 35% in 2025; Thiel exited at a high point, adding fuel to concerns about an “AI bubble.”

At the market level, it’s the same direction. Based on data from the Investment Company Institute (ICI), the size of U.S. money market funds hit a historic peak of about $8.25 trillion at the end of February this year—up 65% from about $5 trillion in 2022. Back then, the narrative was clear: “smart money” was hiding in cash.

The reversal in June: money is flowing back from cash into stocks

The problem is that it’s June now, and this story has already flipped.

According to official ICI data, as of the week ending June 10, the size of money market funds dropped to $7.87 trillion, with a weekly outflow of $21.48 billion. Going back to June 4, it was $7.89 trillion. From the February peak of $8.25 trillion, that’s a contraction of about $380 billion. Money is coming out of cash, not going into it.

Where did it go? Into stocks. CNBC reported that on June 2, the S&P 500 closed at 7,609.78 points—first time in history above 7,600 points—marking the ninth consecutive day of gains; the Nasdaq also reached new highs at the same time. After Nvidia released its new generation of PC chips, it jumped more than 6% in a single day, lifting Dell and HP as they followed. In one sentence: the funds that hid in cash back in February are now watching the market set new highs without them.

Behind this is a signal that was spotted long ago. As investingLive reported, Bank of America (BofA) warned as early as late May that as the market surged to new highs and bullish sentiment peaked, the cash level was actually declining. The $8.25 trillion record was old news from February; by June, the market picture was already different.

The cost of hoarding cash: falling behind stocks by more than double

Why do we say this wave of “risk-avoidance” among the wealthy has been proven wrong? Just look at the return gap.

According to The Motley Fool, if you had held from early 2022—before the bear market, when cash was moving into money market funds—through to now, the S&P 500’s total return would be about 42%, while the Vanguard Federal Money Market Fund over the same period returned only 18%, more than double the shortfall. Hiding in cash may look steady, but the price is missing out on a large stretch of the rally.

This is also why many analysts have always kept a skeptical stance toward “hoarding cash at every dip”:

Historically, events like geopolitical conflicts are often short-term, and may even be an opportunity to buy at lower levels—not a reason to liquidate everything.

The money pulled out of stocks goes to real estate and art

As for those wealthy investors who truly reduced their stock holdings, the money they freed up hasn’t been sitting idle. Goldman Sachs’ survey shows that among people with $1 million to $5 million in investable assets, nearly 40% hold alternative investments; among people with assets exceeding $10 million, the proportion is as high as 80%. The more assets they have, the further they move away from traditional stocks.

Art is one destination. According to UBS’s 2025 art market report, high-net-worth collectors in 2025 averaged allocating about 20% of their wealth to art. Real estate, private credit, and hedge funds are also taking in the funds flowing out of the stock market. The logic is that in an environment of sticky inflation, high interest rates, and an unclear outlook on tariffs, these categories function more like safe havens. But safe havens also come with costs—the return figures above already show the problem.

Big banks keep adding bets: Goldman Sachs and Morgan Stanley raise target prices

If the wealthy’s moves in February were more defensive, then the posture of major Wall Street firms in June is the opposite.

According to Bloomberg, Goldman Sachs strategists (led by Ben Snider) raised their year-end target for the S&P 500 from 7,600 points to 8,000 points at the end of May, citing AI-driven earnings growth. Goldman Sachs also raised its forecast for 2026 S&P 500 earnings per share to $340, implying a 24% year-over-year growth rate, and believes that beneficiaries of AI infrastructure will contribute about half of this year’s index earnings growth. However, Goldman Sachs also left a note: “AI sentiment and interest rates both pose risks in opposite directions.”

Morgan Stanley is even more bullish. In a May 20 outlook, Lisa Shalett, Chief Investment Officer of wealth management, set a one-year target of 8,300 points for the S&P 500, corresponding to about 11% to 12% upside. But she also listed five risks: gains becoming overly concentrated in a small number of AI mega-cap stocks; deterioration in U.S. consumer finances; corporate profits relying on price hikes rather than productivity; pressure on long-end interest rates; and the fact that outside U.S. markets (Japan and parts of emerging markets) are actually performing better. Shalett’s core judgment is that, on the surface, the market is stronger than the underlying economy.

LAYOUT REFERENCE (source): total_lines=55, non_empty_lines=28, blank_lines=27