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In the first three quarters of this year, Warren Buffett’s flagship investment company, Berkshire Hathaway, has sold a total of $28.7 billion (approximately $135 billion MYR) worth of stocks. Some economists believe that this move signals a warning for the U.S. economy 💹🚨 According to Berkshire Hathaway’s financial report, the company net sold $10.4 billion worth of stocks in the first quarter of 2023, nearly $13 billion in the second quarter, and around $5.3 billion in stocks in the third quarter, with the value of purchased stocks being less than $5 billion.

Steve H. Hanke, a former member of the U.S. President Reagan’s Economic Advisory Committee and current professor of applied economics at Johns Hopkins University, suggests that Buffett’s and Berkshire’s actions align with the current relatively high stock prices 💰⬆️ and the continuous decline in the money supply (M2 money stock) 📉🔎, implying that an “economic recession is imminent.” According to Hanke, in U.S. history, there have been four periods, namely 1920-21, 1929-33, 1937-38, and 1948-49, where there was a significant contraction in the money supply, and each period was accompanied by severe economic recession. Buffett anticipates economic difficulties in the U.S. and is positioning the accumulated cash for more advantageous allocation 📝💰

However, other investors offer a more cautious interpretation 🕵🏻‍♂️💬 David Wagner, manager at investment advisory firm Aptus Capital Advisors, suggests that considering Berkshire Hathaway’s substantial insurance business, Buffett may be holding more cash due to increased insurance costs. “Historically, Buffett has mentioned that his company likes to hold cash on the balance sheet to offset potential insurance losses,” he says. This billionaire may choose to retain cash to have options when the market is weak ✊🏻🔖

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