Buffett Says 'Substantial Majority' of Berkshire Shareholders' Money in Stocks

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway (BRK.A -0.13%)(BRK.B -0.16%), has revealed that a 'ubstantial majority' of the company's shareholders have their money invested in stocks. This insight comes from his annual letter to shareholders, released on Saturday, February 22, 2025. Buffett's comments highlight the significant role that stocks play in Berkshire's investment portfolio and the confidence shareholders have in the company's long-term prospects.



Buffett's letter provides a comprehensive overview of Berkshire's performance, investment strategy, and future outlook. One of the key takeaways is the emphasis on stocks as a significant portion of the company's assets. This is not surprising, given Berkshire's history of successful stock investments, including its stakes in Apple (AAPL 0.07%) and Bank of America (BAC -0.89%). However, Buffett's recent stock sales, particularly of Apple and Bank of America, have raised eyebrows among investors. In the second quarter of 2024, Buffett sold $36.1 billion worth of stock and bought just $1.5 billion. Among Buffett's biggest stock sales in that quarter were Apple and Bank of America.



Buffett's stock sales have led some to question his confidence in the market's future performance. However, it is essential to consider the context of these sales. Buffett has stated that he sells stocks when he believes they are trading near or above their intrinsic value. By selling Apple and Bank of America shares, he is implicitly signaling that he thinks these stocks are overvalued at current prices. Additionally, Buffett has mentioned that he is taking advantage of the current tax law to realize capital gains at a lower tax rate. The current corporate tax rate is set to revert from 21% to 35% after 2025. By selling these positions now, Buffett can lock in gains at a lower tax rate.

Buffett's recent stock sales, combined with his lack of share repurchases and the company's growing cash pile, suggest that he sees many stocks as expensive. The S&P 500 currently trades at a historically expensive valuation, with a CAPE ratio of 37.9 in December 2024, which is a substantial premium to its 20-year average of 27. This aligns with Buffett's actions, as he has typically leaned away from stocks ahead of weaker years when the market is overvalued.



In conclusion, Warren Buffett's revelation that a 'ubstantial majority' of Berkshire Hathaway shareholders have their money invested in stocks highlights the importance of stocks in the company's investment portfolio. However, Buffett's recent stock sales, particularly of Apple and Bank of America, should be viewed in the context of his belief that these stocks are overvalued at current prices. His actions serve as a bearish indicator for the market, suggesting that investors should be cautious in the current market environment. This means paying close attention to valuations when buying stocks and building an above-average cash position to capitalize on the next drawdown.