Many who follow Warren Buffett are sounding the alarms that he is prepping for a market decline. The Cooper Academy notes,
“If we look at the past eleven years, he’s been doing one thing – buying stocks.”
“2020, he’s actually been doing completely the opposite. Most of his stock moves have been sales.”
The host evaluates Buffett’s most recent quarterly activity. The host goes on to confirm that of 22 stock moves, 17 were on the sell-side.
Buffett Sells Bank Stocks En Masse
Buffett continues to sell bank stocks. The world’s greatest investor reduced his position in Wells Fargo by 26.5%, JP Morgan by 61.5%, PNC Financial by 41.8%, along with other banks; finally, he sold his entire position in Goldman Sachs. These are major moves for a long-term value investor. The Oracle of Omaha also chose to reduce his exposure to Mastercard and Visa. It appears Buffett might be thinking the American consumer is in for a bumpy road ahead.
He also sold all of his US airline stocks, including Delta, Southwest, American, and United Airlines. These sales should come as little surprise, but the longer-term economic impact of reduced travel will not be known for a few years yet.
The host goes on to explain that one of the five new positions Buffett originated last quarter was Barrick Gold. The value investor purchased about $564 million in the company. But as many of us know, gold is not Buffett’s favorite asset class. In fact, according to the host,
“Buffett has not bought gold ever in his life. In fact, he’s normally against gold.”
He also added 4.2 million shares to his Suncor Energy position. The host comments,
“Energy stocks and precious metals are known to do the best during the very late stages of the market cycle. Often right before a market crash. So, the fact that he’s gone and bought, first of all, gold and energy, is something to mull over.”
As exuberance hits all-time highs along with the market, the ever wise and prudent Buffett appears to be putting on his contrarian hat.
The host notes that,
“I’ve never seen Buffett be this defensive with his market moves, probably since 2006, 2007.”
Finally, the host looks at the Buffett Indicator, designed to measure corporate equities as they relate to GDP. Buffett may be preparing for a market sell-off. While the data we receive from these quarterly statements are always 6-7 weeks delayed, they highlight Buffett’s growing concern over the financial health of mainstreet, given his drastic reduction in exposure to US banks.