Warren Buffett, one of the most successful investors in history, has been sitting on a large sum of cash—approximately $325 billion. The majority of this cash is invested in short-term treasuries, which suggests that Buffett may be cautious about current market valuations.
The S&P 500 index trades at a high 28 times earnings, compared to the historical norm of around 18-19 times earnings. This has led many to wonder if Buffett’s investment strategy is consistent with his long-term approach. However, recent filings show that the billionaire investor has been dumping shares in Apple and Bank of America, but instead buying Domino’s Pizza.
Domino’s Pizza is considered a defensive play as it is a well-established brand with a large market share. The company’s moat is significant, making it an attractive investment for Buffett. However, this move may be seen as unusual given Buffett’s history of investing in growth stocks.
Buffett’s cautious approach to the market raises concerns about potential market reversals. Many experts believe that the current valuation is higher than the long-term average and could lead to a correction. With $325 billion in cash reserves, Buffett seems to be positioning himself for such an eventuality.
It remains to be seen how Buffett will proceed with his investments. However, his willingness to take defensive positions suggests that he is prioritizing long-term value over growth at this point in time.
Source: https://247wallst.com/investing/2024/11/19/buffetts-behavior-signals-something-bad-is-coming-for-the-sp-500-voo