Warren Buffett’s decision to sit on a $300 billion cash pile has paid off. He is the only mogul among the world’s 10 richest whose net worth has risen this year. In a historic two-day rout last week, the wealthiest individuals lost more than half a trillion dollars.
This marked the steepest losses since the 2020 COVID-19 market crash. Buffett’s strategy insulated him and other Berkshire Hathaway shareholders from the market turmoil. This turmoil followed President Trump’s tariff announcement.
From Thursday’s opening bell to Monday’s close, the S&P 500 sank 10.7%. The tech-heavy Nasdaq Composite plummeted 11.3%. This resulted in widespread losses among the ultra-wealthy.
More than $500 billion was wiped from their combined net worths. Friday alone accounted for a staggering $329 billion. This was the largest single-day loss since the height of the COVID-19 market crash in 2020.
Nearly 90% of the billionaires tracked by the index saw their fortunes shrink on Friday. The average decline was 3.5%. Tesla CEO Elon Musk topped the list of losses.
His net worth plunged $31 billion as Tesla shares tumbled over 10% on Friday. Musk lost an additional $4.4 billion on Monday. This brought his total losses over the last three trading days to $135 billion.
Meta Platforms CEO Mark Zuckerberg wasn’t far behind. He watched $27 billion evaporate from his fortune as Meta stock slumped nearly 14% over Thursday and Friday.
buffett’s strategic insulation during market turmoil
Buffett’s preemptive move last year to sell stocks and accumulate $300 billion in cash has largely shielded his company from the ongoing tariff turmoil. In a year marked by soaring valuations and a frenzied stock market, Buffett chose caution over action. The legendary investor pared down Berkshire Hathaway’s portfolio.
He accumulated unprecedented levels of cash. This signaled his skepticism about the price tags attached to public companies and private businesses. Berkshire Hathaway ended the year with cash and cash-equivalent assets totaling $334 billion before liabilities.
The markets saw volatile trading on Monday as analysts weighed the potential repercussions of a global trade war. Despite the turbulence, Buffett’s company, Berkshire Hathaway, has seen its stock rise nearly 8% since January 1. The S&P 500 is down 14% over the same period.
Buffett and his team spent the previous year offloading stocks aggressively. This was a marked shift from their earlier strategy. In 2024, Berkshire sold $143 billion worth of shares.
This was more than triple the $41 billion sold in 2023, and over four times the $34 billion in 2022. After accounting for $9 billion in stock purchases, Berkshire’s net stock sales for the year amounted to $134 billion. Even longtime holdings were not spared.
Buffett trimmed positions in Apple and Bank of America, two of Berkshire’s largest investments. This strategic repositioning resulted in a substantial tax bill. Berkshire paid $26.8 billion in corporate income tax to the IRS in 2024.
Buffett noted this was “the largest amount ever paid by any US company.”
As the market continues to face uncertainties, Buffett’s conservative financial maneuvers have positioned Berkshire Hathaway on stable ground. This exemplifies the value of cautious and calculated investment strategies.
Image Credits: Photo by Nathan Cima on Unsplash
