In 1965, Warren Buffett took control of Berkshire Hathaway. The stock has since returned 19.9% annually, while the S&P 500 has compounded at 10.4% annually. That outperformance is due in large part to shrewd investments made by Buffett, which makes his recent capital allocation decisions a dire warning to Wall Street:
Berkshire sold $143 billion in stock in 2024, while purchasing only $9 billion. That brings its net sales to $134 billion last year. Berkshire has never been a net seller on [sic] that magnitude at any point in its history.
Berkshire had $334 billion in cash and equivalents on its balance sheet, as of December 2024. That figure doubled in the past year, and it represents a new record for the company.
Importantly, in his most recent shareholder letter, Buffett wrote, “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses.” That implies Buffett struggled to find good stocks at reasonable prices last year, which itself is a clear warning to Wall Street.
“Buy the dip” remains solid advice for billionaires and small investors alike.