Is Warren Buffett losing faith in stocks? – The Irish Times

Warren Buffett hasn’t said he’s bearish on stocks, but he certainly acts that way.

Berkshire Hathaway’s latest quarterly report shows its cash on hand rose from $276.9 billion to a record $325.2 billion. (Disclosure: I own shares of Berkshire.)

Berkshire now holds more cash than stocks. In the third quarter, the company sold $36.1 billion worth of shares and bought just $1.5 billion. This marked the eighth consecutive quarter that the company was a net seller.

Berkshire sold most of its shares in Apple last year, reducing its stake from $170 billion to $69.9 billion. In fact, Buffett is increasingly suggesting that Berkshire itself, which is up 26 percent in 2024, is expensive: The company didn’t buy back any of its own shares in the third quarter. In the second quarter, only $345 million worth of shares were repurchased. The contrast with previous years – repurchases totaled over $9.2 billion in 2023, $7.7 billion in 2022 and $27 billion in 2021 – is stark.

This doesn’t prove that Buffett is pessimistic. The now 94-year-old may want to “clear the ground for his successors to reshape Berkshire’s portfolio,” suggests Nicholas Colas of DataTrek Research.

Still, the S&P 500 looks expensive, while Berkshire itself now trades at 1.6 times book value, well above historical norms. As Colas notes, Buffett may well view stocks, including his own, as overvalued, “and therefore vulnerable to a deep correction or an outright bear market.”