Warren Buffett’s Berkshire Hathaway’s recent sale of $8 billion worth of stock raised eyebrows in the financial world, with many experts and investors interpreting it as a precautionary measure against an impending economic downturn and a potential catalyst for a market crash.
Steve Hanke, a professor of applied economics at Johns Hopkins University in Baltimore, noted that Berkshire’s actions align with expectations of a recession and the perception of overvalued stock prices. He also emphasized Buffett’s historical practice of accumulating cash reserves in anticipation of market turbulence, allowing him to seize investment opportunities during downturns.
However, not everyone shares this view. Kevin O’Leary, a Canadian businessman and “Shark Tank” star, offers a contrasting perspective. O’Leary believes that while economic challenges loom for the U.S., they won’t result from Buffett’s stock sales, but rather from rising interest rates.
O’Leary took to the platform formerly known as Twitter, now known as X, to express his opinion: “Warren Buffett selling $8 billion worth of stock is a rounding error in his portfolio. He’s just trying to stay diversified, which is why the market doesn’t care that much about it.”
Expanding on his viewpoint during an interview with Fox News, O’Leary characterized Buffett’s $8 billion sale as “almost meaningless.” He speculated that it might have been initiated by one of Buffett’s new managers as a portfolio adjustment.
Despite his dismissal of concerns surrounding Buffett’s stock sale, O’Leary anticipates “chaos” for the U.S. economy, driven by the Federal Reserve’s consideration of further interest rate hikes.
O’Leary shared his forecast on Fox’s “Larry Kudlow Reports,” stating, “What I anticipate is going to happen here, while we still have full employment which is remarkable, and you don’t put any capital into the small business sector, which is 60% of the jobs in America, you’re going to start to see some real chaos come September, October, November.”
He added, “A trillion for the big boys, nothing for the small guys. And the small guys, they run America, so it has to be rebalanced somewhere.”
In addition to Berkshire’s $8 billion stock sale in the last quarter, the conglomerate also repurchased $1.4 billion of stock, a significant decrease from the over $4 billion repurchased in the first quarter. This move resulted in a 13% increase in Berkshire’s cash reserves, bringing them to a near-record high of $147 billion, the second-highest figure ever reported by the company, according to Insider.
