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Steve Hanke says that Warren Buffett and Michael Bury may be anticipating a downturn and stagnation in the market.
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Berkshire Hathaway sold $8 billion worth of net stock and added to its cash pile in the second quarter.
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Burry’s Scion placed bets against the S&P 500 and Nasdaq-100 indices with a notional value of $1.6 billion.
Warren Buffett and Michael Bury have it Financial markets shook With bearish disclosures this month. Steve Hanke says CEO of Berkshire Hathaway And the “The Big Short” celebrity investor is likely bracing for trouble.
Berkshire sold $8 billion worth of stock and slowed the pace of buybacks The last quarterwhich led to a 13% increase in its money pile to a near-record level of $147 billion.
The sprawling group has now dumped a net $33 billion in equity over the past three quarters, resulting in a $38 billion increase in its stock of cash and cash equivalents and Treasury bills over that period.
Hanke told Insider that Buffett’s moves in the second quarter “dovetail with expectations of a recession and the fact that stocks are very expensive right now.”
“It also matches his long track record of hoarding money in anticipation of the next storm clouds with the ability to pounce on deals as soon as the storm hits,” added the Johns Hopkins professor of applied economics.
Hanke is also known for serving as the Chairman of Toronto Trust Argentina when it was the world’s best-performing emerging market mutual fund in 1995.
Buffett prides himself on being able to save plenty of cash to get through tough times and take advantage of the stock market downturn and economic distress. For example, making deals with Goldman Sachs, General Electric, Harley Davidson, Marsand other cash-hungry companies in the depths of the 2008 financial crisis.
As for Burry’s Scion Asset Management, it is a statement Placed options against S&P 500 and Nasdaq-100 index funds with a face value of $1.6 billion at the end of June. Placing downside bets would cost Perry only a fraction of that number, but they did It’s still a great bet Since the rest of his portfolio was worth only about $111 million at the time.
It was puri warning from U.S Stock market crash And recession For a while, it has previously bet against high-profile companies like Elon Musk’s Tesla and Cathie Wood’s Ark Invest.
“It seems to me that Burry has made a good move,” Hanke said of the Scion chief’s latest major short.
Veteran economist and former advisor to President Ronald Reagan He recently said an insider Stocks look expensive compared to bonds, and he predicted a recession would hit the US economy in the first half of 2024.
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