Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has been making strategic moves in the stock market. His decision to sell a significant portion of his Apple holdings and build up cash reserves has drawn praise from many. In 2024, Berkshire Hathaway sold a net $134 billion in stocks.
The company also nearly doubled its cash reserves to $334 billion, which has sparked many comments and memes on social media. People are celebrating Buffett’s foresight and timing.
Buffett reduced Berkshire’s Apple holdings by 67%. By the end of December 2024, the company had gone from owning 906 million shares worth $174 billion to 300 million shares valued at $75 billion. Berkshire also trimmed its second-largest holding, Bank of America, by 34%.
This reduced the holding’s value from $41 billion to just under $30 billion. Despite these cutbacks, Apple shares have risen 9% since the start of 2024, suggesting that Buffett might have left some money on the table.
Bank of America shares remained relatively stable around the $40 mark.
Buffett’s strategic cash management praised
This indicates that Buffett did not experience significant gains or losses from these sales.
Buffett’s cash pile includes a substantial amount of Treasury bills. This reflects his strategy to seek safer, more lucrative investments amid rising inflation and higher interest rates. At Berkshire’s annual meeting, he explained that building the cash position was attractive under the current market conditions.
He highlighted the appeal of high bond yields and the lack of bargains in the equity markets. Some might speculate that Buffett predicted a market crash. However, it’s more likely that he adjusted his portfolio for the long term.
His strategy provides flexibility to capitalize on undervalued businesses and stocks during market downturns, similar to what he did during the financial crisis. Buffett’s approach is being celebrated online.
Many recall his famous advice to “be fearful when others are greedy and greedy when others are fearful.” His followers also share his past writings, including the “Buy American” essay from the depths of the financial crisis, as a source of inspiration. In the current market climate, where many tech stocks have declined, Berkshire Hathaway’s stock has risen by 11% this year. Buffett’s enduring investment wisdom and strategic cash management have again underscored his status as the “Oracle of Omaha.” His reputation remains untarnished even during market turbulence.
Image Credits: Photo by Maarten van den Heuvel on Unsplash
