Record cash and no new purchases
The financial world is waiting for an explanation from legendary investor Warren Buffett: his company Berkshire Hathaway continues to sell off shares, accumulating a record $334 billion in cash reserves. In his annual report to investors published on Saturday, Buffett did not explain the reasons for his cautious approach, which raised even more questions among analysts. This was reported by CNBC.
He stressed, however, that this does not mean a refusal to invest:
“Although Berkshire has a significant cash position, the bulk of your money remains invested in equities, and that strategy will not change.”
Nevertheless, the company continued to sell assets, reducing its stake in Apple and Bank of America, which had previously been its largest investments, for the ninth consecutive quarter. The total amount of assets sold in 2024 exceeded $134 billion.
Is this a signal of a crisis?
Buffett’s decision to keep a significant portion of his capital in cash raises concerns about a potential market downturn. This is especially true given that the S&P 500 index has been growing by more than 20% for the second year in a row, although there have been signs of instability recently due to fears of a slowdown in the economy.
Some analysts believe that Buffett’s caution may be less a prediction of a crisis than a preparation for the handover to his successor, Greg Abel. This is confirmed by the reduction of excessively large positions and the creation of a financial reserve for future investments.
Buffett also mentioned the only sector in which he is willing to invest:
“Berkshire is likely to increase its stake in the five Japanese trading houses we started investing in six years ago.”
This hint further heightened the intrigue: does this mean that Buffett is waiting for the stock market to crash to get in at the lowest prices?
