Matteo Spaggiari @Matteospaggiari: "𝗜𝘀 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗯𝗼𝘂𝘁 𝘁𝗼..."

Italy

𝗜𝘀 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗯𝗼𝘂𝘁 𝘁𝗼 𝗰𝗿𝗮𝘀𝗵? 𝗧𝗵𝗲 𝗕𝘂𝗳𝗳𝗲𝘁𝘁 𝗶𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿 Warren Buffett, regarded as one of the greatest investors of all time, is signaling a cautious market outlook through his recent actions and a key valuation tool. His long-standing philosophy emphasizes being "𝐟𝐞𝐚𝐫𝐟𝐮𝐥 𝐰𝐡𝐞𝐧 𝐨𝐭𝐡𝐞𝐫𝐬 𝐚𝐫𝐞 𝐠𝐫𝐞𝐞𝐝𝐲 𝐚𝐧𝐝 𝐠𝐫𝐞𝐞𝐝𝐲 𝐰𝐡𝐞𝐧 𝐨𝐭𝐡𝐞𝐫𝐬 𝐚𝐫𝐞 𝐟𝐞𝐚𝐫𝐟𝐮𝐥" A primary tool Buffett uses is the 𝗕𝘂𝗳𝗳𝗲𝘁𝘁 𝗶𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿, which compares the total stock market capitalization (S&P 500 market cap) to the US GDP. He calls it "𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝘀𝗶𝗻𝗴𝗹𝗲 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝗼𝗳 𝘄𝗵𝗲𝗿𝗲 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻𝘀 𝘀𝘁𝗮𝗻𝗱 𝗮𝘁 𝗮𝗻𝘆 𝗴𝗶𝘃𝗲𝗻 𝗺𝗼𝗺𝗲𝗻𝘁" Here's why that's concerning today: 🔺 Over 100% = Overvalued 📈 Current level: ~220%, the highest in history ⏳ Similar peaks preceded the dot-com crash (2000) and the 2008 financial crisis Consistent with these warning signs, Buffett has made strategic moves: • 𝗠𝗮𝘀𝘀𝗶𝘃𝗲 𝗖𝗮𝘀𝗵 𝗣𝗶𝗹𝗲: Berkshire Hathaway's cash position has more than doubled from $167 billion to $348 billion since 2024, reaching its largest reserve ever. This increase occurred just before the market crashed in Q1 2025, suggesting "deliberate preparation for market turbulence". • 𝗔𝗴𝗴𝗿𝗲𝘀𝘀𝗶𝘃𝗲 𝗦𝗲𝗹𝗹𝗶𝗻𝗴 For the last 10 quarters, Berkshire Hathaway has sold more equity than acquired. Notable sales in 2024 include over 600 million shares of Apple stock (reducing their stake by 67%) and 41% of their Bank of America stake, despite Buffett previously calling Apple "probably the best business I know in the world". • 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗗𝗲𝗽𝗹𝗼𝘆𝗺𝗲𝗻𝘁: The majority of this $348 billion, 88% or $305 billion, is invested in US Treasuries, earning an estimated $12 billion in risk-free returns. This provides a guaranteed yield that currently surpasses the earnings yield of the S&P 500, making cash equivalents more attractive than stocks. Buffett refers to this cash pile as his "elephant gun," ready to acquire a large company during a market downturn, a strategy he historically thrives on. Maybe he expects more pain to come. Or maybe he thought the Q1 correction would be worse. For sure everybody is greedy now... From my side, I've significantly reduced risk exposure — shifting from a risk score of 6 to 3 — to preserve capital and stay agile. What about you? Are you adapting your strategy as well? Let me know in the comments 👇 $NVDA (NVIDIA Corporation) $BTC $TSLA (Tesla Motors, Inc.) $META (Meta Platforms Inc)

4 Mentioned

NVDA

BTC

TSLA

META

Strictly Necessary Cookies

Performance Cookies

Functional Cookies

Targeting Cookies