Warren Buffett is considered one of the greatest investors in American history. Under his leadership, Berkshire Hathaway (BRK.A 2.50%) (BRK.B 2.48%) shares have returned approximately 5,500,000% since the mid-1960s, compounding at 20% annually. Comparatively, the benchmark S&P 500 (^GSPC -1.46%) has returned about 10.4% annually during the same period.
Much of that success can be attributed to prudent acquisitions and stock purchases made by Buffett, though his fellow investment managers Ted Weschler and Todd Combs have certainly contributed. Importantly, their recent capital allocation decisions send a grim warning to Wall Street. Berkshire sold $133 billion in stock during the first three quarters of 2024, while purchasing only $6 billion in stock.
That means the company was a net seller of stocks to the tune of $127 billion through the first nine months of last year. Berkshire has never sold stocks so aggressively. But the warning is particularly ominous because the company also had a record $325 billion in cash and short-term investments on its balance sheet when the third quarter ended. In other words, Buffett and his fellow investment managers certainly had the means to make big purchases, but still chose not to.
Read on to learn more.
History says the S&P 500 will deliver a below-average return in 2025
Since 2010, Warren Buffett’s Berkshire Hathaway has been a net seller of stocks — meaning the value of the stocks that it sold exceeded the value of stocks that it purchased — during seven years (excluding 2024). The chart below lists those years, and it shows how the S&P 500 performed in the subsequent year.
| Years When Berkshire Was a Net Seller of Stocks | S&P 500’s Return During the Next Year |
|---|---|
| 2010 | 0% |
| 2012 | 30% |
| 2014 | (1%) |
| 2016 | 19% |
| 2020 | 27% |
| 2021 | (19%) |
| 2023 | 23% |
| Average | 11% |
Data source: YCharts. Chart by Author.
As shown above, the S&P 500 has returned an average of 11% during the 12-month period following years in which Berkshire was a net seller of stocks. Comparatively, the index has returned 13% annually since 2010.
