Warren Buffett's Berkshire Hathaway Sells Off S&P 500 ETFs—What It Means
Big news from the world of investing—Warren Buffett’s Berkshire Hathaway has officially liquidated its holdings in S&P 500 ETFs. This move has raised eyebrows across the financial industry, given Buffett's long-standing support for passive index investing. So, what’s going on here? Let’s break it down.
According to recent filings, Berkshire Hathaway sold off its shares in the SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 ETF (VOO) in the last quarter of 2024. The combined value of these positions was around $22 million. This means that, for the first time in a while, Berkshire Hathaway no longer holds any ETF positions.
Now, before we jump to conclusions, let’s look at the bigger picture. Berkshire’s cash reserves have hit a record $334.2 billion, and for nine consecutive quarters, the company has been a net seller of securities. This suggests a broader strategy of stock market caution rather than a direct rejection of ETFs.
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Buffett himself has dismissed speculation that he sees the market as overvalued. In his latest annual letter, he reassured investors, saying, "The great majority of your money remains in equities. That preference won’t change." This aligns with his long-term investment philosophy—staying in the market but being selective about opportunities.
What makes this move even more intriguing is Buffett’s past endorsement of index funds. He has frequently praised them as a great option for everyday investors, even recommending Vanguard’s low-cost index funds over expensive hedge funds. In 2016, he famously said that if there were ever a statue built in honor of someone who did the most for American investors, it should be Vanguard’s founder, Jack Bogle.
So, why the shift away from ETFs now? It could be a reflection of Berkshire’s increasing focus on cash preservation and targeted investments rather than broad market exposure. Buffett has always been known for his patience, waiting for the right opportunities rather than simply following market trends.
For everyday investors, does this mean it's time to abandon ETFs? Not necessarily. Buffett’s moves are based on Berkshire’s unique position and massive capital reserves. For most investors, low-cost index funds still remain one of the best ways to build long-term wealth.
One thing is for sure—when Warren Buffett makes a move, the market pays attention. Whether this signals broader caution or just another strategic shift for Berkshire, it’s a reminder to always think long-term, stay patient, and invest wisely.
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