저자: ProactiveThinker · 외국인
요약 보기
워런 버핏이 최근 주식을 대거 매도하고 현금성 자산(약 3,000억 달러 규모, 대부분 단기 미국 국채)을 늘린 이유를 분석. S&P500 PE비율이 약 30으로 높아 시장 과열 및 폭락 가능성, 1달러 국채 금리(약 4.5%)의 매력, 2021~2024년 세금 인상 회피 목적 매도 등 세 가지 가설을 제시. 발표자는 버핏이 폭락을 대비하고 있을 수 있다고 말하지만 명확한 단정은 하지 않음.
다듬은 글
Warren Buffett has been acting really weird. He has been massively selling most of his stocks. In fact, if you look at his portfolio, he is now more cash than stocks. And the only reason that you would do something like that is when you're preparing for a massive crash so that when everything collapses, you have all the cash in the world and you will start buying all of his stocks at a huge discount.
Warren Buffett is known to take advantage out of crisises. He timed 2008 financial crisis so accurately that when everybody was suffering, Warren Buffett became the richest man in the entire world. So let's try to figure out why Warren Buffett is sitting on $300 billion worth of cash. Why he has been selling massively all of his stocks the last two years.
So if you're ready, give this video a thumbs up and let's dive right into it. Now to understand what is happening we first have to understand what is a PE ratio. A lot of you might already know what is a PE ratio. It's one one of the indicators that you can take a look at the stock market is how much investors are willing to pay for every dollar of a profit that companies would possibly make.
And this is a very basic indicator. It's not the only thing that you should look at to when you're analyzing stocks. But it's one of the things that you look at. It's very simple to understand because if investors are suddenly overpaying for the dollars of the profits that corporations are making, that is a sign that you should be paying attention to.
Let's say the price of the stock is $100. But the company made a profit of $5. If we take 100 and divide it by five, then that is a PE ratio of 20. So if investors are buying the stock for $100 and it made only $5, that means that investors are paying $20 for every dollar of a profit, the higher the PE ratio, the more the investors are overpaying for this stock.
And the reason could be that investors believe that this company is going to make a lot more money in the future and that's why they are willing to overpay for that stock today. For example, you will see pretty often high PE ratio for tech stocks because technology companies are believed to make much more money in the future.
If you look at the PE ratio of Tesla, you will see that it's over 100. And that's because people who are paying that so much money for the Tesla stock is because they believe that Tesla is going to be astronomically much more profitable sometime in the future than today. Whether that will happen or not, that's a completely different question.
But what is important to pay attention is that what is the PE ratio of the entire S&P 500? S&P 500 represents the entire US economy because it represents all the 500 major companies in the US. So what is the PE ratio of them? If you can find that out, you can find out whether the entire market is overvalued or undervalued because you're not picking one single stock, but you're looking at the entire market.
So if you look at the PE ratios, you will see a clear pattern. Let's go back for example to 1987. The PE ratio of the S&P 500 was 21 and then suddenly you see that it falls down to 11. And that's because it was one of the major crashes in the history of the S&P 500. It was known as Black Monday. When investors overpaid, they started buying a lot of stocks thinking that the stock market is going to grow forever.
And then a reality check came in and the market crashed and investors began to sell because they realized that they have overpaid so much for the stocks. And remember this is like 1980s. Back in the days we did not have technology companies. So nobody was assuming that these companies are going to make so much money in the future.
We did not have AI companies. We did not have Nvidia or Google or Amazon. But rather we had like car companies. We had traditional companies such as Johnson and Johnson or beverage type of companies. But if you go back to 1990s, you will see that again we had a huge decline in the PE ratio of the S&P 500.
It fell down from 23 to 15. A good PE ratio is anything between 15 to 18. Anything above that is considered to be a very high PE ratio and just maybe the stock might be overvalued. that is for the overall market. For certain industries, it could be slightly different. If you're looking at a PE ratio, for example, of a technology company, then you might assume that the PE ratio could be slightly higher there.
But if you're looking for a PE ratio of a car company such as Ford, then probably a PE ratio of over 10 is already overvalued because you don't assume that Ford is suddenly going to build flying cars that will revolutionize the entire world and they will be making a lot of money sometime in the future.
It's a very traditional predictable business that they've been selling these cars for the last 100 years. However, if you look at this period, you will not see a stock market crash. So why on earth when the PE ratios have been adjusted from 23 to 15 the stock market did not crash back in 1990s and that's because there are two reasons why PE ratios can drop number one is when stock prices collapse and that's a massive stock market crash that means that PE ratios have lowered down but the second reason could be is that corporate earnings and profits starts to rise and they will match the current stock prices.
Let me give you an example. So let's say in this case we have like the stock price is 100 and the profits is five and that's why we have a PE ratio of 20. Now let's imagine for a moment that the profits of the company is going to rise to $10 per share. So we have to take a 100 and then we have to divide it by 10 and that will give us 10.
So the PE ratio now is going to be 10 and not 20. So the price of the stock remained the same. However, because the corporate profits have risen, the PE ratios have gone down. And that's why back in 1990s when the internet revolution was taking place and we had a lot of tech companies that emerged, they started making a lot of money.
This was the period when Google appeared. This was the time when Amazon was created and most of the tech companies that you know today. And that's why corporate earnings started to rise dramatically and PE ratio started going down. So a sharp decline in PE ratio does not necessarily means that there is a stock market crash.
It could basically means that corporations are now making much more money and they reflect the stock prices they're being traded in the market. However, if you look very closely, you will see another huge increase in the PE ratio of the S&P 500. It more than doubled in such a short period of time. This is when the dotcom bubble was happening.
It has increased from around 15 to 33. When the PE ratios have increased so much, everybody knew that the stock market is in a bubble and tech companies have been overvalued because investors used to think that all the stock market are growing, all the stocks are growing tremendously and people thought that if they keep buying internet stocks, they will never collapse.
They started buying stocks started to rise dramatically. But these companies were not making as much profits and that's why PE ratios began to rise dramatically. But at certain time people realized that it's a bubble and the entire stock market crashed and that's why you see that PE ratios have fallen from 33 to 25.
In early 2000s the stock market crash reached its peak when the stocks collapsed by 78% and PE ratios have reached 45. The stock market collapsed by 78% to the point where earnings did not match the stocks at all. And that's why PE ratios have reached 45. Over the next couple of years, PE ratios began to fall down because the corporations that survived the dotcom bubble.
They started building their businesses, restructuring their entire business model and started making money. And that's why PE ratios over the next couple of years adjusted. Most of the internet companies entirely disappeared at the peak of the dotcom bubble when the stock market crashed by 78%. In fact, if I'm not mistaken, Amazon stock also crashed by like 95 or 97%.
And if they haven't secured a deal right before the crash, Amazon today wouldn't be one of the most successful companies in the world. So, by looking at the PE ratio of the entire S&P 500, we can have a picture. either the stock market is overvalued or undervalued. So if the PE ratio today is really high, we have to ask ourself the question is that our corporate profits are going to catch up the PE ratio and the stock prices or it's going to be the other way around where stock prices have to fall down in order to reflect the real corporate profits.
Another major crash was the 2008 financial crisis when PE ratios have reached an all-time high. The stock market was falling down. Everybody was selling their stocks and everybody thought that this is the end of the world until the Federal Reserve stepped in and injected the economy with trillions of dollars of cheap money.
And that's why corporate profits began to rise. If it wasn't for all of this cheap money that came from the Federal Reserve, the corporate profits wouldn't have risen and this PE ratio would have started this high. Since then the economy has been doing pretty good and PE ratios have been around 15 to 20 which is a very normal rate.
However, what you see here is that in 2021 PE ratios have fallen down from 38 to 19. But we did not have a market crash back in 2021. The only real market crash that we had was in 2022 when the Federal Reserve hiked the interest rates. And that's because in 2020 and 2021, the Federal Reserve injected the economy with so much cheap money that corporations borrowed this money almost at 0% interest rate.
And that means that if you take a look at their financial statements, suddenly you will see huge profits. They have all of this cash and this cash represents now or reflects the PE ratios or the stock prices that the companies had and that's why you see PE ratios going down dramatically from 38 to 19.
However, pay a very close attention. Since then, the Federal Reserve have been taking money out of the economy, but the PE ratios have been going up dramatically. And right now, the PE ratio of the S&P 500 is 30, and it seems like it's rising. At this point, one of these two things could possibly happen.
Number one is corporate corporate profits are going to rise to reflect the stock prices, and that means that there is not going to be any kind of stock market crash. But number two, if this corporate profits are not going to rise and the PE ratio is going to rise, let's say to 35, maybe to 40, that could mean that the entire market is overvalued.
And if it's overvalued and it's one giant bubble, then it's most likely going to crash just like it did back in 2008, just like it did back in 1990s and early 2000s, just like it did back in 1970s and 80s. This could be one explanation why Warren Buffett is sitting on so much cash because he does not believes that corporate profits are going to double over the next couple of years in order to reflect their stock prices which means that chances of a market crash dramatically rise.
But there is a second reason why Warren Buffett could be doing something like that. Warren Buffett doesn't exactly holds $350 billion sort of cash. Yes, maybe a portion of that money is real cash in bank accounts, but the vast majority of that money is being invested in treasurables. Treasurables are super safe investments where you invest in US debt.
So US debt can be one month treasurables, two months, 6 months, 2 years, 5 years, 10 years, 30 years and so on and so forth. Now if you look at one month treasurable bills that means that the government will pay you back your one month principle that you lended to the government plus the interest and interest rates on them the last two years or the last 3 years has been astronomically high.
This is when Warren Buffett started buying this treasurable bills. At their peak they have been 5.5%. Currently they're about 4.5%. And that means that Warren Buffett is sitting on $350 billion worth of cash. If all of that money is being invested in these one-mon treasury bills in the US government, he's receiving a pure cash of $19 billion and $250 million.
Is there a better investment other than that? If you're investing small amounts of money, maybe it's better to go to the stock market. But if you're investing hundreds of billions of dollars, it's very difficult for you to find an investment that will give you that kind of a return. When you're investing in the stock market, you are making money when things appreciate, when these stocks appreciate in value.
But in this case, Warren Buffett is receiving pure cash of almost $20 billion. I think that's a far better investment than any other investment that Warren Buffett could possibly find. If you look at the history of one month treasure bills, you will see that they haven't been this high for a very long time.
The only other time that they have been this high was during the peak of the 2008. And during that time, Warren Buffett have also been investing in one month treasur bill securities, which means that he might not be expecting a crush. He simply sees a far better opportunity to take all of that cash and invest it in short-term securities in the US government because unlike the stock market, these one-mon treasurable bills are providing him with hundreds, I would say tens of billions of dollars.
Even though that the rates have fallen down to 4.5%, Warren Buffett is still making almost 16 billion dollars worth of cash. And that's why if you lower down the interest rates to 0% maybe in this case Warren Buffett won't be convinced to invest his money in US treasury bills and you will take that money and invested into the stock market.
But this looks like a really great investment and this could be the second explanation why Warren Buffett is keeping so much cash because that cash is being invested in treasurables that are paying such a great dividends. But there is a third explanation why that could possibly happen. If you look at the Trump's tax cuts, they supposed to expire in 2025.
Warren Buffett couldn't possibly know that in 2024, Donald Trump is going to be reelected as the next president of the United States and he is going to make the truck stra cats permanent because they supposed to expire in 2025 because he did not know that the corporate tax rate would have increased from 21 to 35%.
which means that he would have paid so much taxes. To avoid that tax hike, he sold most of his portfolio in 2021, 2022, and 2023 until 2025. Because with Trump's big beautiful bill, Trump's tax cuts became permanent. But how we supposed to know that in 2025, Trump will be president and he will pass his big beautiful bill.
And that's why in 2021, he sells a lot of his stocks and he makes a net profit of $90 billion. In 2022, he doesn't sell much because the market crashed entirely since the Federal Reserve hiked the interest rates. In 2023, he sells most of his stocks and he makes a profit of almost $und00 billion. When I say almost $und00 billion, this is not revenue.
This is pure cash after taxes. In 2024, he again sells a lot of his stocks because he knows that in 2025, Trump's tax cats will expire. So, he makes almost $90 billion. And these three years have been the best most profitable years in the history of Berkshire Hathaway. Especially by this time, he was thinking that he's going to retire.
So why not simply exit most of his positions, make hundreds of billions of dollars of pure profit, and leave a legacy of the most successful investor in history. So these could be the three reasons why Warren Buffett is massively selling off his stocks. Maybe he's expecting a crush, maybe he's not. Maybe he simply did it for tax reasons, or maybe he simply sees treasuries as the best opportunity.
But if you look at the entire market, there is a very good reason why the market could be overvalued. And he might be simply using all of these three reasons to take advantage out of it. On one side, he's making a lot of money from treasurables. On the other side, he's making a lot of profit because he was expecting the tax is going to increase.
But on the other side, he's also expecting a crush and preparing Burkshshire Haway probably for the biggest crash in its entire history. And if you know how I take advantage out of crashes and how I am preparing myself to also be able to take advantage out of this crash, then you can find out the details using the link in the description of this video.
I hope you enjoyed this video. Thanks for watching and I will see you in the next
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