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Is Mr. Buffett Becoming Bearish?

|Includes: Berkshire Hathaway Inc (BRK.A), BRK.B

Is Mr. Buffett becoming bearish?

Why does Warren Buffett say the S&P might do better than Berkshire (BRK.A, BRK.B) if the market keeps going up? To me, that is his most bearish statement of late

My guess: Berkshire is accumulating cash in preparation for the next move of the market downward. If the market continues to move up, being in cash will be relatively negative compared to holding stocks. If the market goes down, being more in cash will have proved to be a smart move. I do feel that making such smart moves would be more consistent with Mr Buffett.

Mr. Buffett is also fairly consistent in saying that he doesn't know what stocks will do tomorrow or next year, but he's been bullish over his career when talking about the distant future. Its' obvious that no one knows when the top or bottom is going to occur just as no one knows whether a certain day will be the hottest day of summer or the coldest day of winter. However, history has shown that both economic cycles and the stock market are cyclical, albeit far less predictable than the weather. I believe Mr. Buffett see that we're in the late spring or early summer phase of the financial seasons. I believe he that knows winter is coming and that winter is coming sooner rather than later so he's preparing for it. This is as natural and expected as a squirrel gathering acorns for the winter. I look at the recent comments by the likes of well-respected fund manager, Seth Klarman, who's said this is a high risk environment to invest in. I also believe Mr. Buffett is feeling the same.

Sure it's possible that Berkshire continues acquisitions and purchasing companies if the right opportunity arises, but I think the more likely next move will be accumulating cash. I also believe that's the correct move at this stage of the market cycle.

In closing, I will refer to a recent quote from Mr. Buffett: "…pay more attention when they're crossing those milestones on the downside, that's when stocks are getting cheaper."