#12 Weekly Update - Buffett's Cautious Stance - Market Correction - Economic Mixed Signals - Announcement
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I find myself thinking about the financial landscape we're in. It's one of those moments where different forces pull the market in opposing directions, making forecasting particularly challenging. What's most fascinating is watching how the smartest minds in the business are positioning themselves amidst this uncertainty.
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Warren Buffett's Quiet Warning
I've been following Warren Buffett for decades, and when he makes a move—even a subtle one—I pay attention. His recent portfolio adjustments speak volumes about his outlook on current market conditions:
Berkshire Hathaway sold off its S&P 500 holdings in the fourth quarter of 2024
These ETFs (managed by Vanguard and State Street) were worth about $22 million each
This move is notable given Buffett's long-standing recommendation for average investors to hold low-cost index funds
Simultaneously, Berkshire has amassed over $334 billion in cash and short-term investments
Most of this cash sits in Treasury bills yielding around 4%
At one point in 2024, Berkshire's T-bill holdings actually surpassed the Federal Reserve's at $234.6 billion
The Oracle of Omaha isn't abandoning his long-term investment philosophy, but he's clearly signaling caution. In his shareholder letter, he noted Berkshire wouldn't prefer cash-equivalent assets over good businesses—implying he's not finding enough attractive equity investments in the current market.
This reminds me of his famous quote: "Be fearful when others are greedy, and greedy when others are fearful." Right now, it seems Buffett is being a bit fearful—or at minimum, exceedingly patient. His actions don't necessarily predict a market crash, but they do suggest a disciplined approach in what he likely sees as an overvalued environment.
Market Reality Check
The numbers tell the story of a market that's taken a significant breather:
The S&P 500 closed at 5,667.56 on March 21, 2025
This marks a 7.8% decline from its February high of approximately 6,147
The index entered correction territory earlier this year, with a $5 trillion market value loss from February highs
The Dow Jones Industrial Average stands at 41,985.35
The Nasdaq Composite sits at 17,784.05
Both the Dow and Nasdaq have shown considerable volatility influenced by economic data and policy shifts. The forward P/E ratio for the S&P 500 was 22.2 at the end of 2024, well above historical averages, suggesting stocks remain expensive despite the recent pullback.
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📅Week's Calendar March 24-28, 2025
High-Impact Events for the Week
Monday (Mar 24): S&P Global Manufacturing PMI and Services PMI at 1:45pm
Tuesday (Mar 25): New Home Sales (Feb) at 2:00pm
Wednesday (Mar 26): Durable Goods Orders (Feb) data at 12:30pm
Thursday (Mar 27): Multiple high-impact releases including Jobless Claims, GDP Growth Rate, and Trade Balance
Friday (Mar 28): Personal Income/Spending data and Core PCE Price Index at 12:30pm, Michigan Consumer Sentiment at 2:00pm
Notable Data Points:
Manufacturing PMI forecast at 51.9% vs previous 52.7%
Services PMI forecast at 51.2% vs previous 51%
GDP Growth Rate Q4 forecast at 2.3% vs previous 3.1%
Personal Spending MoM forecast at 0.6% vs previous -0.2%
Michigan Consumer Sentiment forecast at 57.9% vs previous 64.7%
The week features numerous Fed speeches, with officials Bostic, Barr, Kugler, Williams, Kashkari, Musalem, and Barkin all scheduled to speak throughout the week.
Critical Economic Data and Market-Moving Events
Economic events to watch this week:
Short Term Update - Newest Additions
Movements and Shifts
Recent market activity shifts across various sectors:
Top Buy Signals
ASML 0.00%↑ 158.34% position change, 72 buys at $28.90M
META 0.00%↑ 148.23% position change, 65 buys at $26.10M
TSLA 0.00%↑ 154.90% position change, 68 buys at $27.20M
Notable Sells
BABA 0.00%↑ -62.45% position drop, 32 sales at $12.70M
MSFT 0.00%↑ -61.78% position decrease, 32 sales at $12.80M
AMZN 0.00%↑ -58.90% position reduction, 33 sales at $13.20M
Other Strategic Movements
JPM 0.00%↑ 136.78% position change, 56 buys at $22.40M
NFLX 0.00%↑ 138.67% position change, 60 buys at $24.10M
PEP 0.00%↑ 132.45% position change, 51 buys at $20.50M
Last Week Recap:
In-Short
Sector Performance: The Market's Uneven Response
What I find particularly telling about our current market is how differently various sectors are performing. This uneven landscape offers both warnings and opportunities.
This sector divergence reveals important market dynamics:
Growth sectors like Communication Services and Consumer Discretionary continue to outperform
Defensive sectors like Utilities are showing surprising strength
Health Care and Materials lag significantly, reflecting specific industry challenges
The wide performance gap between best and worst performers (over 20% difference in 12-month returns) speaks to a market that's far from uniform in its assessment of value
These variations remind me of something I've observed throughout my 50+ years in markets: different sectors often live in their own economic realities. While talking heads try to simplify market movements into single narratives, the truth is always more complex. Each sector responds to different inputs, incentives, and pressures.
Economic Indicators: A Mixed Bag
The economy presents contradictory signals, complicating the investment landscape:
Employment
Unemployment rate: 4.1% in February 2025 (up from 4.0% in January)
Nonfarm payrolls increased by 151,000 in February
Broader measures show troubling signs: more part-time workers and multiple job holders
The labor market faces stress amid policy uncertainties
I've noticed that employment data often lags other economic indicators. When companies start feeling squeezed, they typically exhaust other cost-cutting measures before turning to layoffs. The uptick in part-time work and multiple jobholders suggests employers are already adjusting their workforce strategies—often a precursor to more significant employment changes.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.