ETF Wisdom From Warren Buffett on Berkshire's 9th Straight Yearly Win

Billionaire investor Warren Buffett — the Oracle of Omaha — is known for his value investing style. Many want to mirror the legend’s investing strategy and emerge a winner, having navigated the turbulent financial and economic waters.

In 2024, theBerkshire Hathaway (BRK.B) stock added about 23% versus 24% gains in the SPDR S&P 500 ETF Trust SPY. Note that Warren Buffett made headlines by selling two of his favorite stocks, amassing a cash reserve exceeding $300 billion, and guiding Berkshire Hathaway to surpass a $1 trillion market value for the first time. Let’s find out the key highlights of Buffett’s investing strategy last year.

Buffett and his team sold $133 billion of stocks in the first nine months of 2024 and bought less than $6 billion worth. In comparison, they offloaded a net $24 billion of stocks in 2023 and purchased a net $34 billion of stocks in 2022.

Buyback Under Threat?

Between January and September last year, Buffett spent under $3 billion on buybacks, with none in the third quarter. This marked a sharp decline compared to the nearly $70 billion spent on repurchases over the prior four years, including almost $52 billion in 2020 and 2021. Is stock-buyback-based exchange-traded fund (ETF) Invesco BuyBack Achievers ETF PKW under threat? The ETF PKW underperformed the S&P 500 last year.

Cash in King

Increasing stock sales and scaling back buybacks helped Berkshire nearly double its cash reserves in the first nine months, rising from $168 billion to a record $325 billion. Berkshire's cash pile made up for a hefty 27% of its $1.15 trillion of assets at the end of September.

This showed cash was still a king. Investors thus can play the cash-like ETF PIMCO Enhanced Short Maturity Active ETF MINT, which has gained about 5% in the past year, while the ETF yields 5.22%$ annually.

Offload Apple?

Berkshire slashed its Apple holdings, its largest position, by 67% over the first nine months, cutting its value from $174 billion to below $70 billion. The dramatic reduction surprised many, as Buffett had long praised the iPhone maker, calling it "probably the best business I know in the world" and one of Berkshire's "four giants."

Apple shares have considerable weight in ETFs like iShares Global Tech ETF IXN. If you want to follow Buffett's lead, it may be wise to reconsider investing in the AAPL-heavy IXN ETF. Apple shares are off 2.7% in the New Year (as of Jan. 7, 2025) but the stock has gained 30.5% in the past year.

Cut Stake in Bank of America?

Berkshire also reduced its Bank of America BAC holdings, its second-largest position, by around 26% between mid-July and mid-October, generating over $10 billion in proceeds. This lowered Berkshire’s stake from above 13% to below 10%, allowing the company to avoid having to disclose changes to the holding within a few days.

Despite the sales, the stake's value only declined from $35 billion to $32 billion between January and September, as the bank's stock price rose by about 20% during that period. The BAC stock is up 4.6% this year and added 35% in the past year (as of Jan. 7, 2025). Still, if you want to follow Buffett, you can think twice before investing in BAC-heavy ETF Invesco KBW Bank ETF KBWB.

Acquire Chubb & Domino’s?

Berkshire also disclosed a nearly $7 billion stake in insurer Chubb CB in its first-quarter portfolio update, reduced holdings like Capital One in the second quarter, and acquired nearly 4% of Domino's Pizza DPZ in the third quarter, while trimming several smaller positions.

Investors can bet on Chubb-heavy ETFs like iShares U.S. Insurance ETF IAK and Domino’s-present ETFs like AdvisorShares Restaurant ETF EATZ. Chubb stock has about 11% exposure to IAK, while DPZ stock has about 4% focus on EATZ.

The Slow Path to Wealth

Buffett once advised prioritizing long-term, steady investment strategies over speculative, get-rich-quick schemes. In this regard, dividend aristocrats or companies that have a sound history of raising their dividends come across as intriguing bets. ProShares S&P 500 Dividend Aristocrats ETF NOBL could be a good pick here.

Inflation, Economic, and the Constant Threat to Economies

In the face of price inflation and potential economic slowdown, investors should focus on resilient and financially strong companies that have pricing power and can weather economic storms, Buffett once said. One can thus diversify the portfolio with assets that perform well during economic downturns, such as consumer staples, utilities and gold (read: ETF Strategies to Follow Warren Buffett's Investing Wisdom).

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