Warren Buffett executes the most aggressive divestment in decades: $184 billion liquidation in one year

Warren Buffett has closed the most intense liquidation cycle in Berkshire Hathaway’s recent history. Over the past twelve months, the conglomerate has divested more than $184 billion in equity positions, marking an unprecedented strategic withdrawal in scale. Berkshire’s holdings in giants such as Apple, Bank of America, Capital One Financial, Citigroup, Nu Holdings, Nucor, DaVita, VeriSign, and D.R. Horton have been systematically dismantled. According to the most recent SEC data as of September 30, Berkshire now holds a historic level of $381 billion in cash and short-term Treasury bonds.

What explains Warren Buffett’s such radical strategy?

This pattern of divestment is not coincidental. Throughout his career, Warren Buffett has demonstrated a unique ability to identify moments when markets reach unsustainable valuations. His track record reveals a recurring behavior: when he sees overvalued assets, he prefers to accumulate liquidity rather than maintain exposure.

The first notable manifestation occurred in 1969, when Buffett dissolved his original investment partnership. At that time, he considered the stock market to be extremely speculative. In his letter to investors, he wrote: “I just don’t see anything available that offers a reasonable hope of achieving a year as good.” That decision proved prophetic: the market experienced a severe collapse between 1973 and 1974, with the Dow Jones plunging 45%.

Lessons from the late 90s tech bubble

Warren Buffett repeated a similar strategy during the dot-com euphoria in the late 1990s. Berkshire systematically avoided tech stocks while accumulating cash reserves, a decision that protected the holding when the Nasdaq collapsed 78% between 2000 and 2002.

Between 2005 and 2007, anticipating the financial crisis, Buffett reduced positions in cyclical sectors such as petrochemicals and adjusted exposures in consumer goods after considering that valuations had reached unsustainable highs. By 2007, Berkshire had accumulated $44 billion in cash, positioning itself perfectly to acquire depressed assets during the 2008 collapse.

The tech factor: acknowledged mistakes and lessons learned

In 2018-2019, Warren Buffett again reduced positions in tech assets. Berkshire liquidated significant holdings in IBM and Oracle shortly after acquiring them, publicly acknowledging errors in his valuation of tech stocks. He also divested from airlines in 2020, completely abandoning this sector amid the COVID-19 crisis.

What is the current context?

The current scale of liquidations—$184 billion in twelve months—suggests that Warren Buffett perceives a environment where quality investment opportunities are once again limited. The accumulation of $381 billion in cash positions Berkshire Hathaway to execute defensive moves or capture opportunities when volatility increases.

Although some critics point out that these defensive positions may result in losses during sustained bull markets, the accumulated performance is undeniable: Berkshire’s book value grew an average of 18.3% annually from 1965 to 2023. Warren Buffett has consistently demonstrated that patience and discipline outweigh permanent market risk exposure.