Reviewed by Gotrade Internal Analyst
Jakarta, Gotrade News - Global investors are preparing to bid farewell to Warren Buffett, who is set to step down from Berkshire Hathaway Inc. at the end of 2025.
However, one specific investment decision Buffett made last year is back in the spotlight because of its relevance to our current portfolio strategy.
According to a 13F filing released last February, Berkshire was recorded to have sold its entire position in S&P 500 ETFs, including the SPDR S&P 500 ETF Trust, by the end of 2024.
Key Takeaways
- Berkshire Hathaway cashed out on S&P 500 ETFs while market valuations were at a premium level.
- The S&P 500 CAPE ratio hit 40, signaling high market optimism heavily driven by the tech sector.
- Retail investors with a long-term horizon shouldn't rush to copy institutional moves that operate on different strategies.
This move has sparked curiosity among retail investors: is this the time to take profit, or should you hold on while the index hits record highs?
An analysis from The Motley Fool suggests that Buffett's decision reflects his strict investment discipline to avoid chasing "hype," rather than a prediction of a market crash.
Data shows that by the end of 2024, the S&P 500 Shiller CAPE ratio was hovering around 37, indicating that stock prices generally were at a premium compared to their historical averages.
This valuation level is indeed rare and reminiscent of the dot-com bubble era in 2000. However, it is important to note that the current surge is backed by different fundamentals, namely the dominance of big tech stocks and the massive adoption of artificial intelligence (AI) that continues to generate real profits.
Buffett is known for being extremely disciplined about buying assets at a discount. This sale is likely Berkshire's way of locking in significant profits and parking that cash in defensive instruments like government bonds—a completely rational strategy for a fund of that size.
Even though the CAPE ratio is nearing 40 heading into 2026, long-term trends prove that the US stock market continues to grow through various economic cycles. You don't need to blindly copy Buffett's moves, because as a retail investor, you have the luxury of time to hold assets that big institutions might rotate out of.
Reference:
- The Motley Fool, As Warren Buffett Enters Retirement, An Overlooked Berkshire Trade From Last Year Is Back in Focus. Should Investors Be Worried Heading Into 2026?. Accessed on December 26, 2025
- Featured Image: Shutterstock
Disclaimer
Gotrade is the trading name of Gotrade Securities Inc., registered with and supervised by the Labuan Financial Services Authority (LFSA). This content is for educational purposes only and does not constitute financial advice. Always do your own research (DYOR) before investing.
