Warren Buffett Warned About Stock Valuations. So Why Is Berkshire Still Buying Stocks?
Buffett warned about stock valuations in May, but Berkshire has been investing more aggressively since then.
Warren Buffett has long advised investors to pay more attention to actions than words, a principle that holds true when examining Berkshire Hathaway's recent stock purchases despite his own statements about market valuations. In May, Buffett suggested that many prices are looking "silly" and that he's witnessed an unusually high level of gambling in the market.
Yet, in the five and a half months since, the S&P 500 has surged 7%, counter to Buffett's concerns. Despite Buffett's warnings, Berkshire has become more aggressive in its stock acquisitions, becoming a net buyer for the first time in three and a half years in Q2. Berkshire bought $23.5 billion in stocks while selling only $3.7 billion, marking a stark contrast to its previous efforts to sell off major holdings like Apple and Bank of America.
In fact, Berkshire is now buying shares back for the first time since 2024, a strategy usually reserved for situations where it believes assets are trading below their intrinsic value. Interestingly, some of Berkshire's recent purchases include Alphabet and the IPO of Bending Spoons, a company that Buffett has already invested in, highlighting the conglomerate's willingness to embrace high-growth, high-risk tech stocks.
This shift in strategy seems to suggest that Berkshire is less concerned about current market valuations than Buffett's public statements might indicate, and is instead focusing on potential long-term gains in the tech sector.
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