Buffett's birkshire haway now has a record high $325 billion of cash on hand this comes after Warren Buffett sold roughly $22 billion or about 25% of birkshire Hathway's Apple stock in Q3 in total the stake is down 67. 2% so Warren Buffett is dumping Apple shares at the fastest Pace you've ever seen before the question is is Warren Buffett bearish on the economy is he bearish on markets and what's coming next I would argue actually probably not I don't think Warren Buffett is too concerned about the economy personally I believe he's more concerned about Apple Apple over the past 3 years has only grown Revenue 5% and it's trading at a 35 times multiple it's simple as that now some people are going to run away with this and say Warren Buffett is super bearish on our markets in fact I've actually been guilty of that in the past as well to to say that Buffett is bearish on our markets because he's dumping Apple I think is kind of a too simplistic way of actually thinking about this now yes if there's problems ahead for Apple which there probably are I think that's a good sign of problems ahead if Warren Buffett is selling out in the way that he is that could mean there is problem problems for the broader Market coming because of the market waiting in apple on October 22nd I did write this post on X that says a stock market correction is coming about 10% I do site Apple intelligence and the fact that I think it will flop and upon early reports of Apple intelligence it's just bad it's just not good and the expectation is the Apple intelligence will cause a refresh cycle for the iPhone 16 that's not going to happen maybe in the 17 maybe in fact I personally think if we avoid a recession you're probably going to see a pretty aggressive broad Market rally and if Apple actually disappoints as long as you're not an apple it could actually be to your benefit as that money may just go into other areas of our markets now I wrote this post on X last night just to share my thoughts as concisely as I possibly can I say for the next one to two weeks we are in a high-risk environment for the stock market this simply means we have higher odds of a correction via the election sweep or contested election being the more worst case scenarios really that would just dry up liquidity right people would stop buying and they would probably start selling in that scenario of uncertainty especially if it lasted more than a couple of days but I also write there is is also the upside scenario after the election you could see Bond volatility chill out and yields come down a bit you could see an unwinding of Hedges that would be bullish again assuming we know who the new president is whoever it is relatively soon after Tuesday big Tech earnings came in mostly okay not great enough to bring massive upside to the sector but enough to hold things up sure the jobs report was pitifully bad but Wall Street gave it a pass we we won't care about it until the next one we also have the FED meeting Thursday the 7th the FED I can guarantee does not like the recent rise and yields after all they were trying to stimulate not tighten they will sound incredibly bullish with a fallen bond yields I would expect a market rally to be a broad one not just big Tech and the biggest risk we have is a contested election and liquidity drying up so in the most simplistic way that I can explain this if we get the results of the election Tuesday night or Wednesday morning and it's camela then the markets are probably going to Rally quite a bit if we get the results of the election again Tuesday night or Wednesday morning and it's Trump markets are probably still going to Rally just because that uncertainty is over with people will start positioning their portfolios accordingly if we have a sweep that is a little bit more of a tricky situation I don't know how Wall Street will take a sweep presumably they would take it negatively but you could still see a bit of a rally even if we have a sweep I just think it would be on the smaller side now with a rally I think it would come because of bond yields falling bond yields falling is generally better for the broader markets than it is for big Tech so I think big Tech would be the underperformer and you would see a broader Market rally for Trump it's going to be a lot of small caps it's going to be a lot of midcap stocks for a camela win potentially it's going to be the same Playbook as we have seen for 2 years which would be more larger Tech in nature now if we don't know who the president is coming throughout the trading day Wednesday then you likely start to see some selling now I could also make the argument that the bond market is pricing in a trump win and treasury yields are going higher that maybe if Trump does win especially if there is a republican sweep you could see bond yields just go absolutely crazy to the upside right bond yields could run hard and and then that's where things get tricky does that turn into a negative for markets well so far it hasn't been so far it really hasn't affected the markets at all but I think if you go up materially from here it does start to weigh on markets so that could be a negative if we don't see bond yields fall now personally this does feel like a buy the rumor sell the news event no matter who wins it feels like yields are going up in anticipation of this and then afterwards they're going to fall but that's just a hunch kind of like if apple or Nvidia rally into an earnings or rally into some kind of AI event and that AI event is kind of just what we already know you tend to get a sell the news event well in bond landia bond prices are actually falling so people have been selling the rumor and they may actually buy the news if you buy the bonds yields fall so presumably you would see yields fall but I do think overall we are in a higher risk environment if you consider that let's let's call it a crash right you only get a 20% crash about 25% of the time so every four years or so on average you get a 20% decline in the history of the S&P okay I think we're closer to 50% over the next you know 6 months for a 20% crash that is a heightened you know volatility period now I actually want to share with you uh about a page and a half of this book the psychology of money it it's specifically in regards to Warren Buffett and what he thinks about holding cash on the sidelines um and I think you guys will get a lot out of this if you have not read this book book before you definitely should I've read the book a long time ago but I'm I'm re rereading it but in Warren Buffett Berkshire hathway we all know Warren and Charlie Munger but there was also Rick okay Rick they were like the Three Musketeers for birkshire haway and it says investor monish PAB once asked Buffett what happened to Rick Mish recalled and Warren said Charlie and I always knew we would become incredibly wealthy we were not in a hurry to get wealthy we knew it would happen Rick was just as smart as us but he was in a hurry Rick was levered with margin loans and the stock market went down almost 70% in those two years so he got margin calls he sold his Berkshire stock to Warren Warren actually said quote I bought Rick's Burkshire stock at under $40 a piece Rick was forced to sell because he was levered Charlie Warren and Rick were equally skilled at getting wealthy but Warren and Charlie had the added skill of staying wealthy which over time is the skill that matters most it says here no one wants to hold cash during a bull market they want to own assets that go up a lot you look and feel conservative holding cash during a bull market because you become acutely aware of how much return you're giving up by not owning the good stuff say cash earns 1% and stocks return 10% a year that 9% Gap will gnaw at you every day but if that cash prevents you from having to sell your stocks during a bare Market the actual return you earn on that that cash is not 1% a year it could be many multiples of that because preventing one desperate ill time stock sale can do more for your lifetime returns than picking dozens of BigTime winners compounding doesn't rely on earning big returns merely good returns sustained uninterrupted for the longest period of time especially in times of chaos and Havoc will always win now listen to this it says 1. 3 million Americans died while fighting nine major Wars roughly 99.
9% of all companies that were created went out of business four US presidents were assassinated 675,000 Americans died in a single year from a flu pandemic 30 separate natural disasters killed at least 400 Americans each 33 recessions lasted a cumulative 48 years the number of forecasters who predicted any of those recessions rounds to zero the stock market fell more than 10% from a recent high at least 102 times stocks lost a third of their value at least 12 times annual inflation exceeded 7% in 20 separate years the world's economic pessimism appeared in newspapers at least 29,000 times according to google our standard of living increased 20 fold in these 170 years but barely a day went by that lacked tangible reasons for pessimism now this book is really focused on creating again long-term wealth but it does highlight every now and again the risks in the short term for markets markets can go down a lot especially when people are super optimistic when there's not a lot of risk management taking place and that's the environment that we are in today so you have all of these big uncertainties the election what's going to happen with the economy and yes that does create more more risk in the near term of a larger decline I think we're going to get a 10% correction over the next couple of weeks but if you use that as an opportunity and prepare for it now that that return that you see let let's say if the Market's bounc right go down 10% go up 10% you might think that's just 10% but the compounding of that could be thousands of% over the next 20 to 40 years but if you're not prepared for that you are not ready to seize that opportunity and as I've said here on this channel for the last 2 or 3 months I do think it is a time to have more cash on the sidelines to be ready for the inevitable volatility that we are going to see but you also need to stay invested in markets so I hear people all the time in comment sections and in you know my email that say because of you I I sold everything and missed the last 2% of the markets I'm I'm obviously paraphrasing here you should never sell anything right you should always just buy and hold but if you are able to raise additional cash that makes a lot of sense right now even if we rally into year end you haven't sold any stocks you're fully invested from that perspective you take advantage of that rally but you also have more cash on the sidelines if the opposite of that happens and markets sell off into year end or even in the first half of 2025 I'm I'm more optimistic about the second half of 2025 I think if we are going to get a growth scare it's probably going to be before June of 2025 I think that's pretty safe to say and if we can get to midpoint of 2025 without a recession then we may actually have a soft Landing for this cycle now one of the beautiful things about this cycle is the overvalued areas of our markets is really big Tech they have the market waiting in the S&P so they are obviously driving the bulk of the returns but if we see you know that catchup from the rest the markets there's a lot of value to be stripped out of those you know smaller cap companies those midcap companies those companies could go up multiples of where they are today that's why I do think we are probably in a stock Pickers market for you know maybe the next year or two now take a listen to this clip on CNBC from Stephanie Link that says after election volatility markets will rally through year end which again I do think is a about a 50% probability and I do think overall in markets we do have a pretty balanced risk to reward there's a very strong bull case from now until the end of this year there's a strong bear case as well it really depends on what happens with the election now I do think the bull case is not in big Tech it's not in mag 7 The Bull case if there is going to be the bull case that is realized is really with a broader Market rally take us to our talk of the tape 2 months to go for stocks and a very big week ahead with the election and the FED meeting looming large let's ask our panel what's really at stake Stephanie Link of high tower advisers Greg Branch the branch Global Capital advisers and aako yoshioka of we wealth enhancement group Stephen Gregor CNBC contributors it's good to have everybody with us uh nice to see you back here good to be uh with us MrBranch so what's your what's your current view of the market so it's uh it's still neutral and and other than the election I I'm really searching for a catalyst to believe in uh either negative or positive now when we look at the election you know of course there's some drisking here that goes on no matter what the outcome is uh with one candidate uh on another level down when you transition from candidate to elected official we get to weed out some of the rhetoric and and and noise that was never going to make it into policy anyway so I think that that's a drisking event as well and then thirdly both of these candidates have been in office before so we know what sectors and industries they've been supportive of and where we might see a very particular and specific tailent so you've been willing to stay um neutral I think for a while right um in the slow lane so to speak right all this traffic's been passing you in the in the left lane it has um and why have you refused to hit the pedal and join the rush um because you because you you you've missed out obviously um on a good amount of this rally sure this Market I I think my answer is typified by some of the market activity we've seen over the last months and that is the data is still kind of mix Scott um so earnings growth for five straight quarters is great however this quarter is at 3. 6% as opposed to last quarter's 133% that bears some watching um on the inflation front obviously we continue to experience disinflation uh and it remains a topic that most don't want to talk about however the core number has shot back into the 30 basis points range for for month-over-month core growth for the last two two months now uh so wherever I look there's data that makes me optimistic but still things that that give me pause for thought and and I think I'll become more bullish when I find multiples and consensus expectations leaving room for outperformance and I just don't see that right now Steph what what do you make of that well I I think we should applaud 2. 8% GDP growth because that's above Trend well above Trend I think the labor market it's softening but it's still on on a on balance for the most part if if I look at ADP and initial jobless claims well if I look at the 3-month moving average for non-farm payrolls you're at 140 versus 258 a year ago so I understand that we are certainly slowing there and that's the reason why we have a Fed that is embarking on a Fed cut cycle we have lower inflation at an employment cost Index at8 this week which was less than expected a pce at 2.
1 and consumption the consumer is hanging in there uh to everyone's surprise look at final sales to domestic purchases up 3. 2% that is a very healthy number and of course you have this manufacturing Renaissance and all you need to do is point to Eaton quana services GE Vern NOA as examples of this Renaissance anything tied to the grid and power and electrification and that of course is tied to AI so I added up and I see total revenues at 5% and earnings right now on my numbers are up 9% so I think that's very healthy I think we have some volatility into next week we got a lot going on but I think that set once we get through it I think we rally in November and December as people chase because they're underperforming and you've got $6. 4 trillion in money markets Greg earnings versus a year ago are up 8.
