- Warren Buffett is being praised for paring Apple and stacking cash before the market slumped.
- Social media is full of Buffett quotes about market downturns, and memes featuring the investor.
- Buffett’s Berkshire Hathaway sold a net $134 billion of stocks in 2024 and built a record cash pile.
Warren Buffett has sparked a raft of comments and memes on social media after the legendary investor sold most of his massive Apple stake and built a record cash pile before the stock market tumbled earlier this week.
Buffett’s Berkshire Hathaway nearly doubled its stockpile of cash, Treasury bills, and other liquid assets last year to $334 billion (or $321 billion if you subtract payables for T-bill purchases).
The conglomerate’s cash hoard ballooned largely because it sold a net $134 billion of stocks in 2024, and spent less than $3 billion on buybacks, halting them entirely in the second half. For comparison, it sold a net $24 billion of stocks and repurchased more than $9 billion worth of Berkshire stock in 2023.
Sell, sell, sell
Berkshire owned about 906 million shares of Apple worth $174 billion at the start of 2024, meaning the iPhone maker accounted for 49% of the total value of its stock portfolio. Over the next nine months, it cut its top holding by 67% to 300 million shares, worth $75 billion at the end of December.
Buffett and his team also pared their number-two holding, Bank of America, by 34% to 680 million shares in the second half of 2024, cutting the position’s value from $41 billion to just under $30 billion.
As of Tuesday’s close, Apple and Bank of America shares have dropped 15% and 20% each from their November highs.
However, Apple is still up 15% since the start of 2024, meaning Buffett left money on the table by cashing out when he did. If he kept his stake intact throughout 2024 it would be worth nearly $200 billion.
Bank of America is trading around the $40 mark, as it was at the end of June last year, meaning Buffett probably hasn’t won or lost big from selling.
There’s nothing to say the market sell-off, which has pulled the S&P 500 down 9% and the Nasdaq Composite down 13% from their record closes on February 19, won’t worsen as the Trump administration’s policies continue to fuel recession fears.
Moreover, it’s important to consider where Buffett has invested the sale proceeds. Owning Treasurys is more lucrative than in the past; the 1-year yield has jumped from under 1% to over 4% in just over three years, primarily because rising inflation spurred the Federal Reserve to raise interest rates to relieve upward pressure on prices.
Buffett is also a long-term investor who’s owned stocks such as Coca-Cola and American Express for decades. It’s unlikely he pared his portfolio because he saw trouble coming and wanted to cash out before the next market crash — and he probably won’t care much about a few months of stock performance.
He’s publicly soured on banks and pointed to higher bond yields and the prospect of steeper taxes on capital gains as two reasons he was happy to take some Apple profits and buy Treasurys instead. He’s also explained his growing cash pile reflects a dearth of bargains with both private and public companies trading at heady valuations.
It’s also worth noting that quarterly portfolio filings provide limited insight into an investor’s strategy. They’re only a snapshot of their holdings on a single day with a six-week lag, and they exclude shares sold short, foreign-listed stocks, private investments, and non-stock assets.
Even if Buffett isn’t selling stocks and stacking cash because he expects a market downturn, his bearish positioning could still make him a winner if this one continues.
Not only will the strategy temper the impact on his stock portfolio, it means he’ll have plenty of dry powder to deploy on cut-price businesses and discounted stocks, as he did during the financial crisis.
Words to remember
Buffett’s social media followers aren’t only applauding the timing of his Apple sales and cash build. Likely in a bid to shore up market sentiment, they’re lining up to quote his famous advice to “be greedy when others are fearful.”
Moreover, they’re sharing the column he published in the depths of the financial crisis, in which he urged others to buy stocks on the cheap.
Buffett has also won plaudits for getting wealthier when many of his billionaire peers are taking big blows to their fortunes. That reflects a 9% rise in Berkshire stock this year while many blue-chip tech stocks have declined.
The “Oracle of Omaha” has often faced skepticism and claims that he’s lost his touch during previous booms. Now the market mood has turned, he’s back in fashion.
