👉 Background: Warren Buffett is one of the most famous investors in the whole wide universe. He started investing under the Berkshire Hathaway name back in 1965 with his mate Charlie Munger. Now, Berkshire Hathaway has holdings in tonnes of big name companies like Apple, Coca Cola, American Express and more.

‍👉 What happened: In 2024, with almost every investor buying into the bull market, Warren Buffett was selling down. In fact, by the end of 2024, Berkshire Hathaway was sitting on a record $334 billion USD cash — up from just $167 billion USD the year before.

‍👉 What else: With Trump’s tariffs causing the US sharemarkets to fall by nearly $6 trillion, the net worth of nearly all the biggest investors in the world has plummeted. In fact, Elon Musk’s net worth has dropped more than $130 billion USD this year. But Berkshire Hathaway? Their shares are actually up more than 14% this year because Buffett's had most of Berkshire’s cash sitting in short-term Treasury bills.

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‍What's the key learning?

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‍💡Be fearful when others are greedy, and be greedy when others are fearful. The S&P500 was up more than 23% in 2024 and the Nasdaq100 was up nearly 29%. At the same time, Warren Buffett was trimming his massive stake in Apple and Bank of America.

💡While it might feel like cash just sits there doing nothing, for investors like Buffett, it’s a deliberate move. When selling down last year, Buffett claimed that “nothing looks compelling”.

💡 Holding large cash reserves gives you optionality and it gives you the opportunity to pounce when the markets turn...like now.