As the American stock market faces turbulence, Warren Buffett has decided to withdraw from certain American assets and strengthen his positions in Japan.
Buffett’s Strategic Retreat
Warren Buffett, through his holding company Berkshire Hathaway, has significantly restructured his portfolio at the end of 2024. He sold 117 million shares of Bank of America, worth approximately $5.5 billion, as part of a broader disengagement strategy from the American market. This decision has elevated Berkshire Hathaway’s cash reserves to a record $334 billion. This strategy shows the 94-year-old investor’s legendary insight, given the S&P 500's loss of up to $5.5 trillion in market capitalization since the start of the year.
Japan as a Preferred Investment Market
Recently published regulatory documents reveal that Berkshire Hathaway has significantly increased its stakes in five major Japanese trading houses: Mitsui, Mitsubishi, Marubeni, Sumitomo, and Itochu. In his annual letter to shareholders, Warren Buffett explained this strategy by highlighting the similarities between these Japanese conglomerates and Berkshire Hathaway. These companies have stakes in a range of businesses, many based in Japan, allowing Buffett to diversify his investments.
Long-Term Investment Philosophy
These acquisitions began back in 2019, but the recent acceleration reflects strengthened confidence in the Japanese economy amid escalating geopolitical and economic tensions. Buffett assured that he has no intention of parting with these holdings in the near future and emphasized that 'Berkshire’s stake in the five companies should increase somewhat in the coming years.' This approach aligns with his long-term investment philosophy.
Overall, this repositioning toward the Japanese market makes sense for Warren Buffett. Drawing on the similarities between Japanese conglomerates and Berkshire Hathaway, he has warned of potential economic instability in the USA, citing Washington's excessive budgetary spending.
