Warren Buffett will only start buying up stocks again if the Fed intervenes in the market
Warren Buffett, CEO of Berkshire Hathaway and the world’s most successful investor, is currently sitting on $334 billion in cash and history tells us he’s probably not gonna spend any of it on new stock positions unless the Federal Reserve jumps in and stabilizes the market.
The Oracle of Omaha hasn’t made any major deals this year, despite a market downturn that looks like textbook Buffett territory.
While he’s never claimed to time the market, the moves he made over the past year are now standing out. Warren sold off Apple and Bank of America, two of his largest stock positions, just before the market got clobbered.
Now that the S&P 500 has dropped more than 20% from its highs—technically entering a bear market—he’s still not biting.
US stock market is more chaotic than ever
Over the past year, while others were riding the tech rally or betting on interest rate stability, Warren pulled out and parked the money. And now, with the Nasdaq Composite sinking 10% in two trading sessions and the Dow Jones Industrial Average logging back-to-back losses of over 1,500 points, Berkshire’s defensive cash pile is protecting it better than most.
This is the same playbook Warren has used before. In 2021, when the COVID pandemic brought the world economy to a standstill, he had tens of billions ready to deploy. But he didn’t. He waited until the Fed acted.
“We could have deployed $50 or $75 billion, and right before the Fed acted,” Warren said at Berkshire’s 2021 annual meeting. “When Jay Powell acted as he did, that was incredibly important. He moved with a speed and a decisiveness on March 23rd that changed the situation where the economy had stopped.”
Instead of jumping into outside investments during Covid, Warren bought Berkshire’s own stock. The company spent $24.7 billion on buybacks in 2020 and another $27 billion in 2021.
“We can’t buy companies as cheap as we can buy our own,” he said at the time. “And we can’t buy stocks as cheap as we can buy our own.” Those were the biggest repurchases in the company’s history.
The only time Warren opened the checkbook during a crash without waiting for the Fed was in 2008, when the mortgage crisis destroyed the financial system. That’s when he became a lifeline for some of the biggest names on Wall Street.
He handed Goldman Sachs $5 billion right after Lehman Brothers collapsed. He threw another $5 billion into Bank of America and backed General Electric as well. But Warren said he wasn’t trying to make a statement.
“In 2008 and ’09, the truth is, we weren’t buying those things to make a statement to the world,” he said in 2020. “We made them because they seemed like intelligent things to do. And markets were such that we didn’t really have much competition.”
“It was designed to take advantage of what we thought were very attractive terms. But they were terms that nobody else was willing to offer at that time because the market was in a state of panic.”
Warren was only able to pull off those moves because he had the cash and could move fast.
“You are faced, in a chaotic market, particularly where people need large sums … all of a sudden you’re called on for billions, if you’re going to play at all,” he said in 2009. “It was the first time we really faced the question, you know, can we raise a couple billion dollars in a hurry, to be sure that we’ve offset the cash needs of what we’re committing to on the purchase side.”
Now, with that same kind of chaos back in the market thanks to Trump’s erratic economic policies, Warren still isn’t playing. His silence isn’t just about timing. It’s about waiting for the Fed to take the first swing.
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Warren Buffett will only start buying up stocks again if the Fed intervenes in the market
Warren Buffett, CEO of Berkshire Hathaway and the world’s most successful investor, is currently sitting on $334 billion in cash and history tells us he’s probably not gonna spend any of it on new stock positions unless the Federal Reserve jumps in and stabilizes the market.
The Oracle of Omaha hasn’t made any major deals this year, despite a market downturn that looks like textbook Buffett territory.
While he’s never claimed to time the market, the moves he made over the past year are now standing out. Warren sold off Apple and Bank of America, two of his largest stock positions, just before the market got clobbered.
Now that the S&P 500 has dropped more than 20% from its highs—technically entering a bear market—he’s still not biting.
US stock market is more chaotic than ever
Over the past year, while others were riding the tech rally or betting on interest rate stability, Warren pulled out and parked the money. And now, with the Nasdaq Composite sinking 10% in two trading sessions and the Dow Jones Industrial Average logging back-to-back losses of over 1,500 points, Berkshire’s defensive cash pile is protecting it better than most.
This is the same playbook Warren has used before. In 2021, when the COVID pandemic brought the world economy to a standstill, he had tens of billions ready to deploy. But he didn’t. He waited until the Fed acted.
“We could have deployed $50 or $75 billion, and right before the Fed acted,” Warren said at Berkshire’s 2021 annual meeting. “When Jay Powell acted as he did, that was incredibly important. He moved with a speed and a decisiveness on March 23rd that changed the situation where the economy had stopped.”
Instead of jumping into outside investments during Covid, Warren bought Berkshire’s own stock. The company spent $24.7 billion on buybacks in 2020 and another $27 billion in 2021.
“We can’t buy companies as cheap as we can buy our own,” he said at the time. “And we can’t buy stocks as cheap as we can buy our own.” Those were the biggest repurchases in the company’s history.
The only time Warren opened the checkbook during a crash without waiting for the Fed was in 2008, when the mortgage crisis destroyed the financial system. That’s when he became a lifeline for some of the biggest names on Wall Street.
He handed Goldman Sachs $5 billion right after Lehman Brothers collapsed. He threw another $5 billion into Bank of America and backed General Electric as well. But Warren said he wasn’t trying to make a statement.
“In 2008 and ’09, the truth is, we weren’t buying those things to make a statement to the world,” he said in 2020. “We made them because they seemed like intelligent things to do. And markets were such that we didn’t really have much competition.”
“It was designed to take advantage of what we thought were very attractive terms. But they were terms that nobody else was willing to offer at that time because the market was in a state of panic.”
Warren was only able to pull off those moves because he had the cash and could move fast.
“You are faced, in a chaotic market, particularly where people need large sums … all of a sudden you’re called on for billions, if you’re going to play at all,” he said in 2009. “It was the first time we really faced the question, you know, can we raise a couple billion dollars in a hurry, to be sure that we’ve offset the cash needs of what we’re committing to on the purchase side.”
Now, with that same kind of chaos back in the market thanks to Trump’s erratic economic policies, Warren still isn’t playing. His silence isn’t just about timing. It’s about waiting for the Fed to take the first swing.
Read More