Warren Buffett shuns favorite stock, holds $325B in cash, signals caution in overheated market

From Nasdaq: 2024-12-23 06:03:00

In 1965, investing $1,000 in Berkshire Hathaway would be worth $42.5 million today, far outperforming the S&P 500. Warren Buffett oversees a $291 billion portfolio and $325 billion in cash for new opportunities.

Berkshire Hathaway’s incredible performance has caught Wall Street’s attention, leading to major selling in 2024. Buffett didn’t buy his favorite stock for the first time in six years, signaling a shift in strategy.

Buffett’s selling spree included trimming positions in Apple, Chevron, T-Mobile, and others. Berkshire now holds $325 billion in cash, the largest amount ever, suggesting caution in an overheated market.

The S&P 500’s expensive valuation, with a P/E ratio of 25.7, has led Buffett to reduce positions. Apple’s P/E ratio of 41.1 is also concerning, indicating potential overvaluation across the market.

Buffett’s decision to pause buybacks of Berkshire stock in Q3 2024 could signal concerns about high valuations. The conglomerate’s cash reserves of $325 billion suggest readiness for potential market corrections.

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Read more at Nasdaq: Warren Buffett Recently Shunned His Favorite Stock for the First Time Since 2018, and It Could Spell Bad News for Wall Street