Warren Buffett’s Berkshire Hathaway Inc. said it had sold $8 billion worth of stocks in its second quarter profits this year.
Financial news reporters who were keeping a close eye on the market immediately started to question what was going on. Was this a precaution against a looming recession or even the start of a market decline?
A well-known economist and professor at Baltimore’s Johns Hopkins University, Steve Hanke, provided Business Insider with his analysis of the financial move. Given the high stock value, he emphasised that the Berkshire action is consistent with preparing for an economic downturn.
Not all market experts view Buffett’s tactics as a sign of impending market volatility.
Kevin O’Leary, a Canadian businessman and “Shark Tank” TV personality, sees possible problems for the American budgetary system. He attributes this more to an impending increase in interest rates than to Buffett’s massive stock sale.
On X, now known as Twitter, O’Leary joked in an effort to downplay the size of Buffett’s sale: “Warren Buffett unloading $8 billion in stocks? That is just a minor adjustment in his large portfolio.
O’Leary thinks the decision is more about maintaining portfolio diversification than it is about anticipating a market slump. On Fox News, O’Leary clarified his position further by saying, “In the big picture, $8 billion is trivial. Perhaps one of his new team members is simply adjusting a portfolio in this instance.
O’Leary predicts a turbulent time for the American economy even if the Federal Reserve is still undecided on potential interest rate increases this year.
“Given our sustained full employment, coupled with the lack of capital funnelled into the pivotal small business sector (accounting for 60% of U.S. jobs), the latter part of the year could be marked by economic upheavals,” he said, according to Larry Kudlow of Fox company.
O’Leary made it quite clear that while big enterprises may be raking in the billions, the actual pillars of the American economy—small businesses—are being neglected. Over his many years as an investor, O’Leary has made significant investments in small enterprises. The Shark Tank investor is most notable for having a sizable ownership in StartEngine, a retail startup financing platform that has assisted small firms nationwide in raising hundreds of millions of dollars.
In the final financial quarter, the company reported a decrease in buybacks, ending at $1.4 billion, a decrease from the previous $4 billion, aside from Berkshire’s $8 billion stock sale. According to Business Insider, their liquidity increased by 13%, increasing their cash reserves to an almost record-breaking $147 billion.