Outlook Business Desk
Warren Buffett has sparked a wave of reactions and memes on social media after the investor sold most of his substantial Apple holdings and built a record cash reserve before the stock market dropped earlier this week.
In 2024, Buffett's Berkshire Hathaway nearly doubled its cash, Treasury bills and liquid assets to a record $334 billion. By the year-end it sold a net $134 billion in stocks but spent only $3 billion on buybacks. In contrast, in 2023 it sold just $24 billion and bought back over $9 billion of its own shares.
Berkshire Hathaway cut its Apple stake by 67% from 906 million shares worth $174 billion to 300 million shares worth $75 billion. It also reduced its Bank of America holdings by 34% from $41 billion to under $30 billion.
It's important to see where Buffett put the money. Holding Treasurys is now more profitable than before with the one-year yield rising from under 1% to over 4% in just 3 years. This happened because the Federal Reserve raised interest rates to control inflation.
"But I don't mind at all, under current conditions, building the cash position," Buffett said at Berkshire's annual meeting last year. "I think when I look at the alternative of what's available in the equity markets and I look at the composition of what's going on in the world, we find it quite attractive," he added.
Hedge fund manager Anurag Singh supported Buffett's strategy, saying it made perfect sense. "Warren Buffett's $325 billion cash position about 50% of his portfolio makes sense," Singh noted. "When stocks are overly optimistic the risk falls on investors. Funds won't teach this, but the market certainly will," shared Singh.
During the last market downturn Buffett didn't stay on the sidelines he bought aggressively. In the 2008 financial crisis he acquired stakes in Goldman Sachs, Bank of America and other struggling companies at bargain prices. If stocks continue to drop, he may be preparing for a similar move.
Warren Buffett, a long-term investor, has held stocks like Coca-Cola and American Express for decades. It's unlikely he reduced his portfolio out of fear of an impending market crash and short-term stock fluctuations likely don't concern him much.