Berkshire Hathaway taxes: 'paid way more than…,’ says Warren Buffetthttps://t.co/7CRzzHQnuT
— ET NOW (@ETNOWlive) February 22, 2025
Warren Buffett’s Berkshire Hathaway has been hoarding cash, with over $320 billion in cash and short-term Treasury bills at the end of the third quarter of 2024. This move has raised questions about whether Buffett thinks the market is overvalued or if he is waiting for the right opportunity to invest. In Berkshire’s latest 13F filing, the company sold more stocks than it bought, including big chunks of some of its largest positions like Bank of America.
Berkshire Hathaway's cash reserves have hit a record $334.2bn as Warren Buffett continues to sell off stocks. In 2024, the billionaire investor offloaded $143bn worth of shares—far more than the $9bn he invested in new stocks. Instead of reinvesting in the stock market, most of… pic.twitter.com/vmMnUCOpIE
— Holger Zschaepitz (@Schuldensuehner) February 22, 2025
Berkshire also exited two exchange-traded funds that track the broader market: the SPDR S&P 500 ETF and the Vanguard S&P 500 ETF. Several indicators have suggested that the market may be overvalued or that the economy could soon tip into a recession. These include the inverted yield curve and the Shiller CAPE ratio, which compares the price of the S&P 500 to its 10-year average inflation-adjusted earnings.
Buffett and Berkshire have been navigating the market since the 1960s, so they have seen plenty of different cycles.
Berkshire Hathaway is holding over 27% of their Assets in Cash, the highest percentage on record.https://t.co/l5IYmkeySJ pic.twitter.com/WFcugWGyhG
— Charlie Bilello (@charliebilello) February 21, 2025
While conditions are different today, they could be masking similar issues that have led to market downturns in the past. Investors are eagerly awaiting Buffett’s annual letter to Berkshire shareholders, which will be released on Saturday morning.
They are hoping to gain insight into whether Buffett thinks a market correction is imminent.
Buffett’s cautious cash strategy
Despite the soaring stock market, Buffett hasn’t found many opportunities to use his cash hoard.
Warren Buffett just published his annual letter
Here are my 10 key takeaways: pic.twitter.com/r1rpK2obet
— Compounding Quality (@QCompounding) February 22, 2025
Regulatory filings indicate that the trend of selling likely continued in the final quarter of 2024. Buffett’s strategy has always been about finding stocks trading at a massive discount, which are much harder to find in a high market. Some investors believe that Buffett is preparing for a market correction, similar to what he did before the dotcom bubble burst in the early 2000s.
The Buffett Indicator, which calculates the ratio of the market cap of all U.S. publicly traded stocks to the country’s gross domestic product, has surpassed the level it hit before the dotcom bubble burst. While Buffett doesn’t predict market swoons, he has emphasized that his company will always be prepared for one. Buffett’s cash strategy could hint at potential big acquisitions in the near future.
Historical patterns show that Buffett often capitalizes on market downturns, acquiring valuable assets at lower prices. The investment world is watching closely, speculating on Buffett’s next big move. Holding a large cash reserve may be seen as a safeguard against market volatility or a prelude to major acquisitions.
Regardless, it underscores Buffett’s prudent approach to long-term investing.