The World’s Largest Value Investor Only Sees Value in Cash and Japanese Financials

Buffett stays on the sidelines and hoards cash

Highlights

• Buffett stays on the sidelines and hoards cash

• 10-year yields to face a key technical test at 4.37%

• German election delivers a narrow path to fiscal reform

• Gold remains a key uncertainty hedge

Key Takeaways

• German Election, Narrow Road to Growth: There was a marginal positive response to the German election results. Investors need to see pro-growth fiscal and economic reforms coming out of whoever joins the CDU-led coalition, and the path here is a rather narrow one that likely will include three parties since the second-place ultra-right-wing party, the AfD, looks to be out of the picture.

• Buffett’s Bearish Streak: As Bill Smead of Smead Capital Management put it regarding Warren Buffett’s letter over the weekend, “he’s bearish as hell but won’t admit it.” All told, Berkshire sold more than $134 billion worth of stocks in 2024 and in the past quarter, boosted its record cash pile further to $334 billion, almost double the $167.6 billion seen at the end of 2023. The value of Berkshire's equity portfolio stood at $272 billion at year-end. At the end of 2023; these stood at $354 billion.