Warren Buffett’s Strategic Moves: Record Cash Levels and Market Caution

Warren Buffett’s Berkshire Hathaway has significantly reduced its stake in Apple, trimming the position to around $70 billion by the end of September, compared to nearly $175 billion at the start of the year. This selloff, hinted at in Berkshire’s recent earnings report, marks a notable shift in one of the firm’s largest holdings. Despite the reduction, Apple still represents approximately 25% of Berkshire’s $266 billion equity portfolio.

Berkshire Hathaway’s cash reserves have surged to an unprecedented $320.3 billion in the third quarter, up from $271.5 billion the previous quarter. Of this total, $288 billion is parked in short-term Treasury bills. The firm has been steadily accumulating cash for the past nine quarters, leaving it with ample “dry powder” for potential investments. This cautious approach suggests Buffett may see limited opportunities for attractive returns in the current market.

A key metric Buffett monitors is the ratio of stock market capitalization to GDP, often referred to as the “Buffett Indicator.” This ratio recently reached an alarming 198.1% of U.S. GDP, an all-time high. Buffett previously warned that when this ratio approaches 200%, it signals a highly overvalued market.