When Warren Buffett made the bold move of slashing his Apple shares and hoarding cash, the financial world buzzed. Social media exploded with memes and mixed opinions. Some hailed him as a genius, while others questioned his timing. Fast forward to today, and the market has taken a tumble—and Buffett’s strategy is looking increasingly intriguing.
In 2024, Berkshire Hathaway‘s cash reserves skyrocketed, nearly doubling to a record-breaking $334 billion. At the same time, the company sold a massive $134 billion in stocks, barely spending a penny on buybacks, according to an ET report. For context, in 2023, Buffett’s firm sold only $24 billion worth of stocks and repurchased $9 billion of its own shares.
Despite all the chatter about Berkshire’s giant cash pile, Buffett reassured his shareholders in his annual letter: “The great majority of your money remains in equities.” So why did Buffett make these moves?
Buffett’s once-enormous Apple stake, which stood at 906 million shares worth $174 billion, made up nearly half of Berkshire’s stock portfolio. By the end of 2024, Buffett had slashed that position by a staggering 67%, reducing it to 300 million shares worth $75 billion. He also trimmed his holdings in Bank of America by 34%.
Since then, Apple and Bank of America have seen their stock prices dip by 15% and 20%, respectively, from their peaks in November. While Apple still posted a 15% increase in 2024, leaving some profits on the table, Bank of America’s price has largely stagnated since June. So, did Buffett foresee trouble, or was he simply making a calculated strategic shift?
Buffett’s cash strategy
One thing’s clear: Buffett is playing it safe. US Treasury yields have skyrocketed from under 1% to more than 4% in just three years, making bonds a far more attractive option. Inflation, rising interest rates, and the Federal Reserve’s policies have pushed Buffett to build up Berkshire’s cash reserves, even in the face of potential market volatility.
In last year’s Berkshire annual meeting, Buffett stated, “I don’t mind at all, under current conditions, building the cash position.” With stock prices running high and bargains few and far between, Buffett’s strategy signals a shift toward patience and caution in a market he believes is overvalued.
Is Buffett playing it smart?
Hedge fund manager Anurag Singh thinks Buffett’s hefty cash reserves are well justified: “Warren Buffett’s cash call of $325 billion—about 50% of his portfolio—makes sense,” Singh wrote. “When stocks are priced too optimistically, all the risk falls on investors. Markets will teach you this lesson.”
On the other hand, financial author Robert Kiyosaki has been sounding alarms about an impending market crash. Kiyosaki recently warned, “The EVERYTHING BUBBLE is bursting,” and predicted the coming crash could be the biggest in history. With the Nasdaq Composite down 4% in a single day and the S&P 500 down nearly 9% from its record high, concerns are growing that the downturn may deepen.
Is patience pays off in the long run?
Buffett’s cautious stance now reminds us of his actions during the 2008 financial crisis. Back then, he didn’t sit on the sidelines—he bought aggressively, snagging discounted stakes in Goldman Sachs, Bank of America, and other major players when prices hit rock-bottom. If the market continues to slide, it’s likely that Buffett is preparing for another buying spree.
As Buffett has always emphasized, long-term thinking is key to successful investing. In his 2017 shareholder letter, he reminded investors, “There is simply no telling how far stocks can fall in a short period.” However, if a major market downturn does occur, Buffett’s advice echoes the wisdom of Rudyard Kipling’s poem If: “If you can keep your head when all about you are losing theirs… Yours is the Earth and everything that’s in it.”
Genius move or a costly mistake?
So, what’s the verdict? Critics argue that Buffett may have moved too soon, missing out on potential gains as Apple continued to climb. On the other hand, his supporters believe that he’s playing the long game—waiting for the right moment to strike. Buffett has always emphasized the importance of patience and discipline, and this cautious approach could be a sign that he’s preparing for a bigger opportunity ahead.
One thing is clear: Buffett’s war chest of cash is unparalleled, and if history is any guide, he’ll be ready to capitalize on the next market downturn in a way few others can. When the right opportunity comes along, Buffett won’t be reaching for a thimble—he’ll be grabbing a bucket.
As the market remains volatile, the question remains: Was Buffett ahead of the curve, or did he misjudge the timing? Whatever happens, his strategy will be closely watched, as his ability to navigate turbulent markets is unmatched. Time will tell whether his cash hoarding will pay off or if he’s left billions on the table by sitting out the recent stock surge.