2024-09-23 02:34:26
When the man who built the largest investment fortune in history — and whose preferred stock holding period is “forever” — rapidly “dumps” two of the world’s most popular stocks, questions about what it means for the market and economy are inevitable.
THE Warren Buffett steadily reduces its exposure to Apple and the Bank of America in recent months.
His Apple position has nearly halved this year, and Berkshire Hathaway’s stake in Bank of America, after selling $8 billion last week, has shrunk to 10.7 percent.
This in principle means that the market is very expensive even for believers who want to buy and hold the shares. It also means that the smart money is fading this rally and that Buffett is likely expecting a sharp correction.
And the fact that he hasn’t made any major acquisitions in a while, despite having a huge amount of cash at his disposal, further underscores his apparent lack of opportunity and perspective, CNBC comments.
However, there is also the opposite. Berkshire has been a net seller of shares from its investment portfolio in each of the past seven quarters – a period in which the S&P 500 has appreciated by 50%.
Why is Buffett selling?
What the sell-down in Apple and BofA likely reflects, more directly, is how dangerously large those positions have become in Berkshire’s portfolio. He has said in the past that he regretted not selling part of his huge stake in Coca-Cola when the stock soared in the late 1990s. So with Apple he may have wanted to avoid the same mistake.
As for Bank of America, it was an extremely profitable investment that was opportunistically introduced shortly after the global financial crisis, and there is probably some reasonable goal of at least reducing Berkshire’s stake below the 10% mark, accompanied by more strict control of movements by the Capital Market Commission.