Warren Buffet is also referred to as the “Oracle of Omaha” in the investment world. In the first quarter, the oracle decided to increase the cash position of its investment firm Berkshire Hathaway by $2 billion by selling risk assets. Is the investment legend preparing for a potential recession?
Berkshire Hathaway goes on the defensive
The large Berkshire Hathaway is in any case on the defensive at the moment, according to the sale of $ 13.30 million in shares. With that capital, Buffet mainly invests in cash and US government bonds in the first quarter of 2023.
Government bonds – depending on the term – now yield a return of up to 5 percent per annum. Especially if you expect that we are heading towards a recession, that can be a very interesting way to still get some returns.
“The majority of our businesses will report lower earnings this year than they did last year. The fantastic period for the US economy is coming to an end,” Buffet said hear from themselves at Berkshire Hathaway’s annual shareholders’ meeting.
$130.6 billion in cash
At the time of writing, Berkshire Hathaway is sitting on a mountain of $130.6 billion in cash. The highest level since late 2021, when stocks entered a bear market. The company also holds a large portion of its cash in short-term US government bonds.
So they currently yield a return of about 5 percent. In other words, Warren Buffet is preparing for a potential stock market crash. We are of course already seeing the first signs of this in the misery of the US banking sector.
So far, the growing likelihood of a recession has also put pressure on the Bitcoin price. This is partly due to the high correlation between Bitcoin and other risk assets, such as the US Nasdaq 100, for example. In that respect, things are looking equally gloomy for Bitcoin at the moment.