Buffett is hoarding cash like crazy, holding about 2.3 trillion yuan in cash, and has sold 100 million shares of Apple stock. What signals does this release? What is he worried about?
Buffett's latest financial report shows that Berkshire Hathaway continued to hoard cash in the third quarter and significantly reduced its holdings in Apple and other stocks, releasing numerous signals.
1. Cautious about the overvalued U.S. stock market
The overall valuation level of the U.S. stock market is currently high, especially the significant growth of some tech stocks, which relies mainly on high expectations for the future, creating certain bubble risks. According to the Buffett Indicator (the ratio of U.S. stock market capitalization to GDP), the current U.S. stock market has far exceeded the long-term average, indicating serious overvaluation.
2. Concerns about the macroeconomic outlook
The global economy currently faces various uncertainties, such as inflation, geopolitical tensions, and interest rate hikes by the Federal Reserve, which affect corporate profitability and lead to cautious market sentiment. In this environment, hoarding cash is to maintain flexibility, so that there is capital available to invest in quality assets when the economy retraces. This strategy can also avoid passive responses to short-term market fluctuations.
3. Divergence on Apple and tech stocks
Apple has been one of Berkshire Hathaway's most important holdings in recent years, but from the reduction in holdings, Buffett may not fully agree with Apple's current shareholder return strategy, especially the focus on buybacks rather than dividends. Although Apple's stock buybacks have increased earnings per share in the short term, they do not provide direct cash returns to investors, which does not fully align with Buffett's investment preference for stable cash flow. Additionally, Apple's recent innovations like the Apple Car and Vision Pro have not generated sufficient market appeal, which may also affect Buffett's confidence in holding.
4. Non-participation in politics and maintaining market neutrality
Recently, the market has paid attention to Buffett's political stance, but Buffett publicly declared that he would not support any political candidates, indicating that he always maintains market neutrality. This position reflects Buffett's belief in adhering to value investing rather than being swayed by market sentiment or external influences.
