Warren Buffett has a reputation as one of the greatest investors ever, and he has the track record to back that up. What's interesting about that is that he's known as a contrarian investor; he doesn't do what everyone else does. Despite myriad followers and legions of fans who try to imitate his success, his method is still considered going against the grain.
Consider what's been happening for the past two years. It's been a strong bull market, which means investors are buying, but Berkshire Hathaway (BRK.A +0.43%)(BRK.B +0.40%), Buffett's holding company, has been a net seller of stocks every quarter throughout. It hit nine straight quarters of net selling stocks in the 2024 fourth quarter, and it ended the year with $334 billion in cash, its largest stockpile ever. Buffett has been at the helm of Berkshire Hathaway for 60 years, which puts that into context.
Armchair analysts have been dissecting Buffett's trading behavior to see what investors can learn from it and what it means about the markets. Specifically, people have been wondering if he thinks there's a market crash on the way.
Well, the time has come. The markets tumbled last week after President Trump's "Liberation Day." Is Buffett finally buying stocks?
Fear and greed
Buffett has made it clear on many occasions that he isn't interested in buying overpriced stocks, and that he's wary of a strong bull market.
Many people know his famous credo about fear and greed from the Chariman's letter Buffett penned in 1986 : "We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful."
In that same letter, he claimed not to know how any market would move, but that a bull market that becomes "uncoupled" with true stock values would be bound to fall. "As this is written, little fear is visible in Wall Street...unfortunately, however, stocks can't outperform businesses indefinitely." That's when he's interested in buying.
Bargains and value
Buffett's success is clear, and so is his investing method. But investors still find it challenging to get into Buffett's mindset. He's known for investing in undervalued stocks. His 1986 letter continued, "[w]hen conditions are right, that is, when companies with good economics and good management sell well below intrinsic business value -- stocks sometimes provide grand-slam home runs."
But how he determines that isn't always obvious. One example of what was a clearly undervalued stock that Berkshire Hathaway bought is Kroger, which it bought in 2019. Kroger is the largest premium supermarket chain in the U.S., which meets Buffett's criteria for a company that has a long-term role in the U.S. economy. But it wasn't doing so well at the time, and look how cheap it got when Buffett bought it.
KR PE Ratio data by YCharts
It has since made many operational changes and rebounded, and Kroger stock is up about 170% since Berkshire Hathaway bought shares.
However, Buffett and his team recently bought Pool Corp stock, which doesn't look so cheap as compared to recent averages.
POOL PE Ratio data by YCharts
They may have been hedging their bets, considering how different scenarios could play out. Indeed, while the S&P 500 (^GSPC +1.01%) is down 13% in 2025, Pool is down 7%.
Knee-deep in opportunities?
If Buffett found that kind of equity product to put the company's money to work even under conditions of high bull sentiment, it's likely he's delighting in what's available right now. Just a few weeks ago, in the Berkshire Hathaway annual letter, he spoke about finding bargains in the stock market: "Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities." He praised investing manager Greg Abel, who's in line to take over Berkshire Hathaway, as "vividly" showing "his ability to act at such times."
Image source: The Motley Fool.
Now could very well be such a time. Many excellent stocks are at decades-low valuations, including Buffett stock Amazon.
I would note, though, that many Buffett stocks are beating the market today. They're the safe, established stocks that hold up under all sorts of circumstances. Buffett may not be likely to buy more of them today because they aren't necessarily cheap. But he might find new stocks that are worth buying at today's prices.
We won't know if Berkshire Hathaway broke its streak to become a net buyer of stocks until at earliest the first-quarter report, which includes the month of March. However, stocks have moved even lower in April, and trading activity for the month won't be reported until the second-quarter update.
I don't have any knowledge of what's happening at Berkshire Hathaway right now, and the economy could be in what you might call uncharted territory. But Buffett's made no secret of how he invests, and I wouldn't be surprised to find out that he and his team are finding bargains in today's market.
