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Does Warren Buffett’s Stockpile of Cash At Berkshire Hathaway Signal A Looming Recession?



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Market-watchers looking at moves made by Berkshire Hathaway CEO Warren Buffett think the Oracle of Omaha is preparing for a recession, but others aren’t so sure.
Berkshire Hathaway earlier this month reported selling a net $8 billion worth of stock in the second quarter, and slowing its buybacks, causing a surge in cash and Treasury bills on hand to a whopping $147 billion.
The move was a continuation of stock sales over the last three quarters amounting to a net $33 billion.
The famous investor is known for preferring to stockpile cash to weather downturns, and buy stocks at bargain prices.
Robert Kiyosaki, the author of “Rich Dad, Poor Dad,” appeared earlier this month on the Fox Business program “Cavuto: Coast to Coast” and suggested Buffet is stockpiling cash and “waiting for the market to crash.”
But the apparent sales frenzy may not necessarily mean a recession is looming.
“I am not sure Warren Buffet raising cash is a direct sign that he believes we are heading for recession. I think those who are trying to paint a picture that we may be headed for one can use this as an opportunity to try and make their case,” said Lawrence Sprung, certified financial planner and author of “Financial Planning Made Personal.”
“I will say that over the last decade, cash was not a great asset class to maintain, as your rate of return was effectively zero. Now with short-term rates significantly higher, and longer-term rates too, maintaining cash positions is not as detrimental,” Sprung said. “Maybe this is the reason he is raising cash, maybe not.”
TMX contributed to this article.