Buffett’s Berkshire Hathaway nearly doubled its cash, Treasury bills, and liquid assets in 2024, reaching a record $334 billion. By the end of the year, it had sold a net $134 billion in stocks, barely spending $3 billion on buybacks. For perspective, in 2023, it sold just $24 billion and repurchased over $9 billion of its own shares.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett reassured shareholders in his annual letter.
Why Buffett Ditched Apple and Bank of America
Berkshire’s Apple stake once stood at 906 million shares worth $174 billion—nearly half of its stock portfolio. By December, it had slashed the position by 67% to 300 million shares, worth $75 billion. It also cut its holdings in Bank of America by 34%, from $41 billion to just under $30 billion.
As of this week, Apple and Bank of America have dropped 15% and 20% from their November peaks. While Apple is still up 15% in 2024, meaning Buffett left some money on the table, Bank of America’s price remains roughly where it was last June.
So, did he see trouble ahead, or was this just a shift in strategy?
The Case for Sitting on Cash
Owning U.S. Treasuries is more attractive than it used to be. The one-year yield has soared from under 1% to over 4% in just three years. Rising inflation and the Federal Reserve’s response have made bonds a better bet than before.“But I don’t mind at all, under current conditions, building the cash position,” Buffett said at Berkshire’s annual meeting last year. “I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.”
His cautious approach reflects concerns over sky-high valuations and a lack of bargains. For a man who has held onto Coca-Cola and American Express for decades, short-term stock swings don’t seem to bother him. But his move signals something bigger—a broader shift in how he views the market.
What the Experts Say
Hedge fund manager Anurag Singh weighed in on Buffett’s strategy, saying it made perfect sense. “Warren Buffett’s cash call of $325 billion—about 50% of his portfolio—does make sense after all,” Singh wrote. “When stocks are pricing too much optimism, all risk lies with the investors. Funds won’t teach you this. Markets certainly will.”
Meanwhile, Robert Kiyosaki, author of Rich Dad Poor Dad, has been issuing dire warnings of a major crash. “The EVERYTHING BUBBLE is bursting,” he recently wrote on X. “I am afraid this crash may be the biggest in history.”
With the Nasdaq Composite plunging over 4% in a single day and the S&P 500 dropping nearly 9% from its all-time high, fears of a deeper downturn are growing. Some analysts point to U.S. trade policies, inflation risks, and potential recessions in major economies like the U.S., Germany, and Japan.
Buffett’s Playbook: Patience Over Panic
The last time the market tanked, Buffett didn’t just sit back—he bought aggressively. During the 2008 financial crisis, he snapped up stakes in Goldman Sachs, Bank of America, and other struggling firms at rock-bottom prices. If stocks keep sliding, he may be gearing up to do the same.
Buffett has always advocated for long-term thinking. “There is simply no telling how far stocks can fall in a short period,” he wrote in his 2017 shareholder letter. But should a major decline occur, he advised heeding these lines from Rudyard Kipling’s poem If, “If you can keep your head when all about you are losing theirs… Yours is the Earth and everything that’s in it.”
The Verdict: A Smart Bet or Market Misfire?
Buffett’s critics argue he moved too soon, leaving billions on the table. His supporters say he’s playing the long game, waiting for better opportunities. Either way, he’s sitting on a war chest that few can match.
And if history is any guide, when the next golden opportunity arrives, he won’t be reaching for a thimble—he’ll be reaching for a bucket.
