Warren Buffett, the CEO of Berkshire Hathaway, has once again shown his smart investment skills. The internet is full of praise for his recent strategic moves. In 2024, Berkshire Hathaway sold a net $134 billion worth of stocks.
It chose to increase its cash and Treasury bills position to a record $334 billion. This move was perfectly timed as it came just before one of the biggest market drops in recent years. The company’s cash reserves grew a lot in 2024 after it stopped buying back its own stock entirely in the second half of the year.
In 2023, the company sold a net $24 billion of stocks and bought back over $9 billion worth of its own stock. But in 2024, it focused on building up its liquid assets instead. Buffett told Berkshire shareholders that even though the company had a lot of cash, most of their money was still invested in stocks.
At the start of 2024, Berkshire Hathaway owned about 906 million shares of Apple, worth $174 billion. This was 49% of its stock portfolio. By the end of the year, the company had reduced this holding by 67%.
Berkshire Hathaway sold off big portions of its Apple and Bank of America holdings.
Buffett’s smart cash strategy admired
But its strategic cash buildup has drawn attention to Buffett’s investment strategy.
The S&P 500 and Nasdaq Composite went down a lot, driven by fears of a recession caused by ongoing policy changes and economic ups and downs. One key part of Buffett’s strategy has been to hold more Treasury bills. These have become more profitable due to rising interest rates meant to fight inflation.
Buffett has said that in the current situation, increasing the cash position is a smart strategy. This is especially true considering the lack of good investment opportunities in the market. Buffett is known for investing for the long term.
His choice to reduce specific holdings was likely due to high market valuations rather than expecting an immediate market crash. His cash reserves will let him take advantage of opportunities in discounted stocks or companies if the market keeps going down. Buffett’s actions have sparked new interest in his famous investment advice to “be fearful when others are greedy, and be greedy when others are fearful.” His smart moves during market ups and downs have made his reputation as a clever and forward-thinking investor even stronger.
Many of his billionaire peers are seeing their fortunes go down. As the Oracle of Omaha navigates these turbulent times, his strategy of holding a lot of cash and Treasury bills shows he is ready to use capital effectively when the right opportunities come up. In an unpredictable market, Buffett’s approach is a lesson in careful and strategic investment planning.
Image Credits: Photo by Andrew Neel on Unsplash
