Warren Buffett’s latest 13F filing with the Securities and Exchange Commission (SEC) has sent a strong warning to Wall Street about the state of the market. The billionaire investor has hoarded cash and sold more stocks than he bought, indicating that he believes the broader market is overvalued.
Berkshire Hathaway’s massive stockpile of $320 billion in cash and short-term Treasury bills suggests that Buffett is taking a cautious approach to investing. The company also exited two exchange-traded funds (ETFs) that track the S&P 500 index, including the SPDR S&P 500 ETF (SPY) and the Vanguard S&P 500 ETF (VOO).
This move is significant because Berkshire Hathaway purchased both of these ETFs in 2019 and has not changed their positions since. The decision to sell these ETFs now implies that Buffett believes the market is no longer a good investment opportunity.
Several economic indicators have suggested that the market may be overvalued or heading towards a recession. The inverted yield curve and the Shiller CAPE ratio, which measures the price of the S&P 500 compared to its earnings, are two such indicators.
Buffett’s warning should not be taken as a prediction that the market will crash immediately. However, it does suggest that the billionaire investor is taking a contrarian view on the market and advising his investors to avoid entering new positions if they trade at expensive valuations.
For long-term investors, Buffett’s advice is to prepare for some volatility and perhaps a correction, even if short-lived. While conditions are different from previous market cycles, history can still offer valuable lessons that help investors navigate the future. By heeding Buffett’s warning and taking a cautious approach, investors can minimize their exposure to potential risks and protect their investments.
Source: https://www.fool.com/investing/2025/02/21/warren-buffett-issued-daunting-warning