Investment has countless ways, but risk is the first to consider.

Warren Buffett's Stock Reduction Related Data

On the evening of August 3rd, Beijing time, Berkshire Hathaway released its financial report for the second quarter of 2024.

The financial report shows that as of June 30th, Buffett net sold stocks worth $75.5 billion.

And he reduced his holdings in Apple Inc. from 789 million shares in the first quarter to 400 million shares, a reduction of nearly 50%.

Buffett cashed out $63 billion from Apple, which is approximately 450 billion yuan in Chinese currency.

Buffett's method of clearing his Apple stocks is really astonishing. He once said that unless a major event occurs, Apple would be the biggest investment.

While talking, he has significantly reduced his holdings in Apple!

In fact, the stocks that Buffett reduced are not only Apple but also Bank of America significantly.Between July 17th and 19th, Berkshire Hathaway reduced its holdings by 33.89 million shares of Bank of America stock.

Between July 22nd and 24th, Berkshire Hathaway reduced its holdings by nearly 19 million shares of Bank of America stock.

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Between July 25th and 29th, Berkshire Hathaway reduced its holdings by approximately 18.41 million shares of Bank of America stock;

From July 30th to August 1st, Berkshire Hathaway sold another 19.22 million shares of Bank of America stock.

After four rounds of selling, Buffett has cumulatively reduced his holdings by 90 million shares of Bank of America stock, realizing about $3.8 billion.

Buffett has frequently sold off his holdings this year, what does this indicate? Does the stock god not look good for the U.S. stock market?

The reason for the stock god's large reduction in U.S. stocks

Buffett once said at the shareholders' meeting that the reduction of Apple shares was due to the expectation of future tax increases, so some profits were taken from the Apple position.

Some market analysts believe that Buffett reduced Bank of America because the increase in Bank of America this year has exceeded the S&P 500, so he chose to reduce his holdings at a high position to profit a part.Warren Buffett has significantly reduced his holdings, primarily due to concerns about overvaluation in the market. The previous gains were too substantial, accumulating a high level of risk, and there is a strong possibility of a future correction.

How high is the valuation, exactly?

Let's first examine the current valuation of the Nasdaq 100 Index, which is representative of the US technology sector.

The Nasdaq 100's current valuation is still at 34.25 times, placing it at the 80.96th percentile in historical terms, which is a very dangerous position.

Moreover, prior to this, the Nasdaq 100 had already fallen from 20,690 points to 18,263 points, with a correction of 11.73%. This means that even after the correction, the Nasdaq 100 still has a valuation of 34.25 times, which is obviously very frightening.

Recent trend of the Nasdaq 100

Buffett sensed the market risk in advance and chose to significantly reduce his holdings to avoid risk.

We all know that in Buffett's investment philosophy, there is an important concept called "margin of safety."

That is to say, no matter what company it is, it should not be purchased at too high a price, and there should be some margin of safety left.This approach has avoided many risks. In Warren Buffett's investment career, the valuation of the stocks he bought was always below 15 times, and he only made moves when the price-to-earnings ratio was low.

Let's take a look at Apple's current P/E ratio. The current dynamic P/E ratio of Apple is 32.83, which is clearly an overvalued position. Part of the reason for the stock god's reduction is also that the stock price of Apple Inc. is not cheap.

Therefore, the main reason for Buffett's significant reduction is still the current market valuation is too high, and the probability of a future pullback is large, so he chooses to cash out.

Buffett's significant reduction in U.S. stocks enlightens us.

Looking at the stock god's investment career, it can be said to be very impressive, almost every move is exquisite and just right.

So, the stock god's current significant reduction in U.S. stocks also has a certain reference for us ordinary investors.

Let's try to summarize, first, the stock god's current significant reduction indicates concern for the future U.S. stock market, so we ordinary investors should avoid investing in U.S. stocks or should not give U.S. stocks too high a weight.

Especially for friends who invest in the NASDAQ 100, they should be aware of the risk > opportunity at this time, so they should make a smart choice.Secondly, why can Buffett stand out among so many investors? And also continue to make money, becoming one of the world-class stock gods.

This indicates that there are many things on him that are worth learning for us ordinary investors. As long as we learn Buffett's investment philosophy and add some of our own thinking, I believe it will be very helpful for our investment, and success can be imitated.

Summary

Buffett has significantly reduced his holdings of U.S. stocks and set aside a large amount of cash. One is based on the current market risk, and the other is also preparing for the next opportunity.

So, if you want to do a good job in investment, you should learn the valuable things from those investment masters, such as every time Buffett makes a move, it is worth pondering.

If you want to do a good job, one is to rely on oneself to continuously try and make mistakes, and accumulate experience to improve slowly. The other is to directly learn the philosophy and methods from successful people.

In this way, you will always come to the fore unexpectedly!

What other reasons do you think the stock god has reduced his holdings by a large amount? Welcome to comment!

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