Stocks
Overvalued?
Warren
Buffett Agrees!
Buffett T-bills & Chills: Piled up T-bills, Ditched Stocks, Bonds, and Share Buybacks in Q3
by Wolf Richter •
Cash is king for Warren Buffett. His investment vehicle, Berkshire Hathaway, continued to dump its two biggest stock holdings in Q3, Apple and Bank of America. It was a net-seller of stocks for the eighth quarter in a row, selling $36.1 billion of stocks, and buying only $1.5 billion, for net sales of $34.5 billion. It didn’t buy back any of its own shares. And it further increased its already huge pile of cash, particularly its Treasury bills, according to Berkshire’s Q3 earnings report released on Saturday.
In the quarter through September 30, Berkshire Hathaway piled on an additional $48 billion in cash, cash equivalents, and Treasury bills, bringing the total cash pile to $325 billion, nearly double where it had been a year ago.
DYI: Warren Buffett is simply responding to
the massive historical overvaluation of the stock market in general and
reducing significantly his exposure to any of the high flying technology companies.
DYI is an offshoot to Harry Browne’s permanent portfolio that maintains 25%
at all time in Stocks, Lt. Bonds, Gold, and Cash equivalents. I adjust the exposure based on how far above
or below the mean valuation for Stocks, Lt. Bonds, and Gold anywhere from 0% to
50%. Cash equivalents are my default
position ranging from 0% to 100%. My
adjustment is based simply using a formula that increases or decreases the
percentage held depending on how deep or steep those three assets are away from
their mean. Today and for a very long time stocks are outrageously
overvalued!
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