- Warren Buffett's investment in international markets drives stocks higher.
Warren Buffett's Berkshire Hathaway has sold its holdings in the S&P 500 index funds, marking another withdrawal from the stock market.
The conglomerate sold its shares in two exchange-traded funds, or ETFs, from prominent investment firms Vanguard and State Street Global Advisors.
A type of investment known as an ETF is a combination of stocks or bonds in a single fund that mirrors the performance of a specific index, such as the S&P 500, the Nasdaq, or the Dow Jones. The S&P 500 is a measure of the 500 biggest companies in the United States.
They were liquidated in the fourth quarter of 2024.
This leaves 94-year-old Buffett with no holdings in ETFs, despite having previously praised the funds and encouraged others to invest in them.
In Berkshire's 2016 annual shareholder letter, Buffett suggested 'low-cost index funds', and preferred them to hedge funds.
"When trillions of dollars are managed by Wall Street professionals who charge high fees, it's typically the managers who reap substantial profits, not the clients," he said at the time.
In the same letter, Buffett also commended Vanguard founder Jack Bogle as 'the person who has done the most for American investors.'
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At the end of the previous year, the company held the largest cash reserve in its history, totaling $334.2 billion.
Certain investors are worried that Buffett's cash reserves suggest he is pulling back from the stock market because it appears overpriced, or possibly because he has information about an impending downturn that others are not aware of.
Sticky inflation and a possibly slowing economy.
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In his annual letter published earlier this month, Warren Buffett, known as the Oracle of Omaha, attempted to dispel this speculation.
He stated that, despite what some current commentators view as an extraordinary cash position at Berkshire, the majority of the company's money remains invested in equities.
'That preference won't change.'
Berkshire may have sold off ETFs tracking the S&P 500, but it still holds a substantial amount of individual stocks from the index.
He still retains billions of dollars worth of shares in these companies.
Five major Japanese conglomerates - Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo - sent their stocks soaring.
Stocks in companies that run a variety of businesses, similar to Berkshire, rose by over 5 percent on Tuesday following Buffett's endorsement.
Mitsubishi led the way, surging 7.5 percent, as the other four each rose by more than 5 percent.
Buffett initially stated that he had invested in the companies in 2019, but had limited Berkshire's shareholding to below 10%.
However, in his latest letter on February 22, Buffett announced that the trading houses had agreed to 'moderate the restriction' slightly.
He observed that the companies operate very successfully in a manner somewhat similar to Berkshire's own model.
Known as "sogo shosha," Japanese trading houses operate businesses ranging from overseas oil and gas production to salmon farming and television shopping.
Since Buffett's initial investment, these companies have outperformed Tokyo's Nikkei 225
in an emailed statement.
"Trading houses are currently trading at significantly lower levels than their previous peaks, which might lead Buffett to view this as an opportunity to acquire more," Norikazu Shimizu, an analyst at IwaiCosmo Securities Co, said to Bloomberg.
With Trump's presidency and numerous changes to tariff policies, the market is uncertain, but trading houses are involved in a wide range of business, so Buffett likely views them as a safe investment.
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