Warren Buffett's Historic Sell-Off Signals Caution for Wall Street in 2025

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Warren Buffett's Berkshire Hathaway has executed a record stock sell-off, liquidating $127 billion more in shares than it purchased in the first three quarters of 2024. This aggressive strategy, including selling $133 billion in stocks against just $6 billion in purchases, raises concerns about below-average market performance in the coming year, according to financial analysts.

Buffett's approach contrasts sharply with his company's hefty cash reserves, which stood at $325 billion at the end of Q3 2024, as reported by Nasdaq. Historically, when Berkshire has opted for more selling than buying, such as during the last seven years since 2010, the S&P 500 has delivered lower-than-average returns.

Experts are particularly wary due to the S&P 500's high cyclically adjusted price-to-earnings ratio of 37.9, well above its 20-year average of 27. Morgan Stanley's chief investment officer, Mike Wilson, suggests that investors should adopt a selective approach while potentially holding more cash to capitalize on future buying opportunities, considering the challenging market landscape ahead.

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