Warren Buffett's Berkshire Hathaway just announced they now hold a record $334 BILLION in cash. To put this into perspective, between Q1 2024 and Q4 2024, their cash balance rose a massive $145.2 BILLION.
Buffett has been selling stocks for a record 9 consecutive quarters, starting in late 2022
Why is he selling? Clearly valuation play a large role. The average free cash flow yield on S&P 500 stocks is at its lowest level in over two decades!
While economic data has been surprising to the downside, the Philadelphia Fed manufacturing prices paid index rose to the highest level last month since October 2022.
Weak growth + high prices = stagflation.
Even Point72’s Steve Cohen is bearish.
The Citi Economic Surprise Index continues to trend lower. The US economy is clearly weakening. Bonds yields may continue to fall, but inflationary pressures may not bring them back anywhere near their September lows.
An environment of sticky inflation and weakening growth is not good for stocks. While it may be ‘good’ for bonds, it is not great. What is the alternative? Cash.
This is why Buffett is dumping.