Warren Buffett's warning to Wall Street intensifies as he dumps Apple and Bank of America shares

Billionaire investor Warren Buffett is single-handedly responsible for Berkshire Hathaway's compounded annual gain of almost 20% in 59 years

Billionaire investor Warren Buffett's nearly 20% annualized gain at Berkshire Hathaway (NYSE:BRKb) versus the S&P 500 index's roughly 10% over 59 years is no mean feat. The investor's mastery over value investing principles and strong track record over the decades make investors listen to his advice, especially during stretches of market volatility.

The Oracle of Omaha is known for investing in great businesses at reasonable prices and holding on to them for the long term. Short-term trends don't easily influence the 94-year-old, and he often goes against the market consensus, which has mostly proved profitable for him.

He had once stated in a shareholder letter that he and his team' attempt to be fearful when others are greedy and to be greedy only when others are fearful.'

Buffett Has Been Dumping Shares Since 2024

Buffett's warning to Wall Street started in 2024 when he significantly reduced his holdings of stocks like Apple (NASDAQ:AAPL) and Bank of America (NYSE:BAC). He also closed positions in several index funds tracking the S&P 500, building a massive pile of cash. Despite a year-long rally, Buffett's net sales totalled $103.32 billion, which lifted Berkshire Hathaway's cash reserves to $257.54 billion. These moves drove speculation about whether there are no bargains in the market.

The investor also broke a six-year streak of buying Berkshire Hathaway, thinking his own company's stock was overvalued.

The S&P 500 Shiller CAPE ratio, which measures price and earnings per share over a 10-year period to gauge economic fluctuations, reached above 37, indicating that stocks have become expensive. This could also have been one of the reasons why Buffett considered offloading stocks in bulk.

However, he reassured investors about his preference for equities over cash. "Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities," Buffett noted. "That preference won't change."

Interestingly, the Berkshire chair recently expressed concern about disappointing economic data and the impact of President Donald Trump's tariffs on the broader economy and corporate earnings. The Nasdaq and S&P 500 recently slid into correction territory, dropping over 10% from their most recent peaks.

Buffett's Warning To Wall Street Intensifies

During an interview with CBS last week, Buffett described the tariffs as "an act of war," adding that they could translate to higher prices for consumers. When looking at the tariffs, he said it's vital to think "and then what?", referring to who will take accountability for the costs. His views could imply that the tariffs pose a significant headwind for companies and the economy in the near term.

While this doesn't necessarily mean Buffett will avoid investments in the stock market, he remains cautious of the developing situation. While the recent tariffs could disrupt a company's financial goals in the short term, a business with strong fundamentals is likely to navigate the volatility over time successfully.

Buffett also mentioned that despite not piling into stocks in 2024, the value of Berkshire Hathaway's private holdings rose "and remains far greater than the value of the marketable portfolio." Despite a drop in stock holdings last year, he opened positions in companies, including Constellation Brands and bumped his stake in Domino's Pizza in the latest quarter.