Berkshire did report some of its latest financials for the quarter ending 30 September 2025 more than two weeks ago. However, this report only told us that Buffett was a net seller of stocks over the quarter. We didn't know exactly which stocks he, or his two investing lieutenants, had actually been buying and selling.

Well, today, that veil has been lifted. Thanks to the company's most recent '13F' filing, we get to have a good look at what's been happening in the Berkshire portfolio.

What has Buffett been buying at Berkshire?

Well, as we've already established, Buffett did a whole lot more selling than buying. Many of Berkshire's top holdings were trimmed. This includes a significant US$10.6 billion sell-down of Apple shares, representing about 15% of Berkshire's position.

Even so, the iPhone-maker remains Berkshire's largest holding, with the company retaining a US$64.9 billion stake. That's roughly 21% of Berkshire's portfolio.

Berkshire also offloaded meaningful chunks of Bank of America, Verisign and D.R. Horton.

Although Buffett, or his underlings, were net sellers of stocks, they were still picking up some shares.

As my Fool colleague Kevin reported earlier today, the most significant new position for Berkshire was in Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). The filing shows that Berkshire initiated its first-ever position in Alphabet over the September quarter. The company recorded a US$4.34 billion position, or just over 17.8 million Class A shares, in Alphabet, as of 30 September.

Who really bought Alphabet stock?

This is a significant development for Berkshire, as Buffett has always shown, and discussed, a reluctance to invest in tech stocks. He famously pined about missing out on Alphabet's success back in 2019, and only initiated a small position in Amazon that same year.

Even the purchase was reportedly initiated by one of Buffett's lieutenants, Todd Combs or Ted Weschler. It's possible, even perhaps likely, that one of those two managers is responsible for the Alphabet purchase. Or perhaps it was a call made by the incoming CEO, Greg Abel. Abel is due to take the reins of Berkshire in January when Buffett sadly is scheduled to step back from the CEO role he has held since the 1960s.

We probably won't find out for a while, if at all.

Some other stocks Berkshire added to over the quarter just gone include Chubb, Domino's Pizza and Sirius XM.

Berkshire's five largest positions remain, in order: Apple, American Express, Bank of America, Coca-Cola and Chevron.

The post Here are the stocks Warren Buffett just bought (and sold) appeared first on The Motley Fool Australia.

The index, which tracks the 500 largest companies in America, reached 6,698.88 in intraday trading before closing at 6,693.75 points. 

The S&P 500 has now risen 14% for the year to date. 

Nvidia Corp (NASDAQ: NVDA), which makes up around 8% of the index, rose nearly 4% on news that the chipmaker would be investing up to US$100 billion in OpenAI to support new data centres and other artificial intelligence infrastructure.

Nvidia closed at $183.61, just short of its new all-time high of $184.55 reached in intraday trading. 

Since April, US technology stocks have rallied strongly. Investors may be wondering if they've missed the boat or if further upside lies ahead.

Bank of America remains bullish on US tech

Despite rebounding sharply since the "Liberation Day' dip, Bank of America (NYSE: BAC) strategists believe US technology stocks can reach higher levels. 

As recently reported in the Australian Financial Review, Bank of America believes investors should position for further gains in the US tech space. 

According to the AFR:

Strategist Michael Hartnett pointed to 10 equity bubbles since the start of the previous century, finding that these periods of extreme overvaluation produced average trough-to-peak gains of 244 per cent. That suggests that, after rising 223 per cent from their March 2023 low, the magnificent seven cohort has "more to go".

Goldman Sachs Strategist David Kostin also recently revised his projections for the S&P 500, rolling forward three, six, and twelve-month S&P 500 return forecasts to 2%, 5%, and 8%, respectively.

How ASX investors can benefit

ASX investors looking to capitalise on his trajectory can buy individual US shares or ASX exchange-traded funds (ETFs). 

The most well known ASX ETFs, Vanguard US Total Market Shares Index AUD ETF (ASX: VTS) and iShares S&P 500 AUD ETF (ASX: IVV) contain diversified exposure to US companies. VTS ETF contains more than 4,000 companies, while IVV ETF holds 500. 

While this appears to be extremely diversified, given the number of companies held in the ETFs, there is still a relatively high exposure to US tech, given their record level of concentration. In particular, the 'Magnificent 7' makes up around 40% of the IVV ETF. 

Investors after even more concentrated exposure to the megacap tech stocks could consider the Global X Fang+ ETF (ASX: FANG), which contains just 10 equally weighted holdings. It holds all Magnificent 7 companies except Tesla Inc (NASDAQ: TSLA). This allows ASX investors to own the majority of Magnificent 7 companies in a single trade. 

Should US tech rally further, any one of these ASX ETFs is likely to rise with it.

The post S&P 500 hits another record! Bank of America predicts US tech to charge higher appeared first on The Motley Fool Australia.

But even so, I still own quite a few shares that pay meaningful dividend income every year. As it happens, most of these investments have also delivered meaningful capital growth. Today, let's discuss the biggest dividend payers in my personal portfolio.

The three biggest dividend payers in my ASX share portfolio

MFF Capital Investments Ltd (ASX: MFF)

First up is the listed investment company (LIC), MFF Capital. MFF, like most LICs, invests in an underlying portfolio of shares. In this case, it is mostly American stocks. This LIC is run by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris McKay. I like Mackay's Buffett-esque habit of buying high-quality companies at decent prices, and holding them for as long as possible.

Some of MFF's entrenched tenants include Mastercard, Visa, Amazon and Bank of America.

What's great about MFF is that it pays a strong, fully franked and rising dividend, despite its low-yield portfolio. Between 2021 and 2024, the company raised its annual (fully franked) payouts from 6.5 cents to 13 cents per share. Today, the company trades with a dividend yield of just under 3.4%, although I am lucky to have a yield-on-cost far higher than that. As such, MFF is one of the largest dividend payers in my ASX portfolio today.

Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)

Next up, we have an entrant in this exchange-traded fund (ETF) from popular provider Vanguard. The Vanguard Australian Small Companies ETF. This index fund tracks around 170 shares from the smaller end of the ASX spectrum. I find it complements a classic index fund like the Vanguard Australian Shares Index ETF (ASX: VAS) that I also hold rather well.

It might not seem like it, but this ETF has paid me some massive dividends in recent years. When this ETF pays out its next dividend distribution on 16 July later this month, investors will have enjoyed a total of $5.37 in dividend distributions per unit. At the current VSO price of $68.40, this equates to a monstrous yield of 7.85%.

Schwab US Dividend Equity ETF (NYSE: SCHD)

Finally, a US-based ETF rounds out my portfolio's most lucrative dividend stocks. The Schwab US Dividend Equity ETF is a fund that holds a large portfolio of US stocks that all demonstrate reliable and rising dividend income potential. It holds a range of shares in this endeavour, including Texas Instruments, Chevron, PepsiCo, Altria and Coca-Cola.

Since SCHD ETF tends to hold only stocks that raise their dividends like clockwork, it can offer the same to its investors. I've only owned this ETF for a year or so, but already, my dividend income has risen meaningfully. Today, thanks in part to its dividends coming in US dollars, it is a major, and welcome, income payer in my portfolio.

The post Here are the 3 biggest dividend payers in my ASX stock portfolio today appeared first on The Motley Fool Australia.

Which exchange-traded funds (ETFs) are they? And what might the next 5 years look like? 

Let's see.

VanEck Australian Banks ETF (ASX: MVB)

At the time of writing, the VanEck Australian Banks ETF is up 100.53% over the past five years. For an annual management fee of 0.28%, the MVB ETF comprises seven Australian banks, including the big four banks. Each of the big four banks represents approximately 20% of the fund, while Macquarie Group Ltd (ASX: MQG) has a 17% allocation.

The ASX banking sector has performed incredibly well over the past few years. In particular, Commonwealth Bank of Australia (ASX: CBA) has defied analyst expectations and risen 172% in five years. Today, it reached another new all-time high of $192.

However, analysts and fund managers continue to warn that the ASX banking sector is overvalued. Macquarie currently has 2 neutral ratings and 2 underperform ratings on the big four banks. This suggests that the next five years are unlikely to match the past five years.

BetaShares Australian Financials Sector ETF (ASX: QFN)

The BetaShares Australian Financials Sector ETF is up 108.05% over the past 5 years, at the time of writing. For an annual management fee of 0.34%, the QFN ETF tracks the largest ASX financials stocks (including the big four banks), as well as insurance companies. 

With 28 holdings, it is more diversified than the MVB ETF. However, with 70% of the ETF invested in the big four banks, its forward returns are likely to be correlated with those of the MVB ETF.

Betashares Global Banks Currency Hedged ETF (ASX: BNKS)

The Betashares Global Banks Currency Hedged ETF is up 103.36% over 5 years. For an annual management expense of 0.47%, investors gain exposure to the world's largest banks outside of Australia in a single trade. 

This ETF is very well diversified, with 60 holdings. As of 30 May, its largest holdings were JP Morgan & Chase (7.6%), Bank of America (7.3%), and Wells Fargo (6.1%). 

Yesterday, I discussed JP Morgan relative to CBA shares. As explained, JP Morgan is arguably a much higher-quality bank and is trading on a price-to-earnings (P/E) multiple that is less than half of CBA (14 vs 33). By preferencing Australian banks (and Australian bank ETFs) in spite of high valuations, ASX investors are demonstrating a high level of home bias. In the case of ASX bank stocks, this could dramatically impact forward returns.

Based on valuation, the BNKS ETF is likely to outperform the MVB ETF and the QFN ETF over the next 5 years. 

One disadvantage of investing in foreign stocks is currency risk. However, the BNKS ETF is hedged to Australian dollars, reducing this risk. 

Investors looking for banking exposure or ASX financials ETFs over the next 5 years might like to consider the BNKS ETF.

The post 3 ASX financials ETFs that have doubled in 5 years appeared first on The Motley Fool Australia.

Buffett has delivered outstanding results for more than half a century, consistently beating the market with his soothsayer like abilities.

Towards the end of last year Buffett started to downsize Berkshire's positions in key holdings such as Bank of America (NYSE: BAC) and Apple Inc (NASDAQ: AAPL).

Once again, Berkshire Hathaway's cash pile grew and then markets tumbled.

Buffett's ability to seemingly gaze into the future is built on focus, a disciplined investing mindset, and a talent for analysing companies and markets.

And one of the investing tools Buffet has utilised over the decades to determine whether or not the market is over valued has come to be known as the 'Buffett Indicator'.     

In fact, Warren Buffett told Fortune Magazine the indicator is "probably the best single measure of where valuations stand at any given moment".

What is the Buffett Indicator?

The Buffett Indicator is simply a method of comparing the total value of the stock market to gross domestic product (GDP).

From there, it can be determined whether or not the market is overvalued by looking at how closely aligned it is with the state of the economy.

This is done by dividing the total value of the stock market by GDP.

If the result is 1, or 100%, the market is in sync with the economy, based on the indicator.

If the figure is higher, it can suggest the market is overvalued.

Conversely, if the figure is lower than 1, it may show the market is undervalued.

What does the indicator say about the ASX?

The total market cap of all companies listed on the ASX is currently sitting at around $3.29 trillion.

Based on projections from the International Monetary Fund, Australia's GDP for 2025 is expected to be around $2.74 trillion.

If we divide the ASX market cap by projected GDP, we are left with a figure of 1.2, or 120%.

As such, depending on how the Buffett Indicator is interpreted, it appears the ASX's valuation is ranging from fair value to overvalued.

Of course, to give more meaning and context to readings from the Buffett Indicator, results should be compared to historical averages.

And it should be noted that while the Buffett Indicator can be a useful tool, it is just one way of gauging a share market's fair value.

The post What is the 'Buffett Indicator'? And what is it signalling right now? appeared first on The Motley Fool Australia.

His approach has allowed him to amass a personal fortune worth billions of dollars.

And many of those who have put their trust and cash in Mr Buffett's capable hands have become incredibly wealthy.

Like most other shares, Berkshire Hathaway shares have suffered as markets have nosedived, shedding about 7% of their value last Friday.

It's unlikely Warren Buffett will be losing sleep over the current downturn though.

History repeats

He's seen it all before.

And he knows how to take advantage when shares are going cheap.

In times like these, studying Mr Buffett's previous purchases during downturns could pay handsomely.

Let's look at three investments Mr Buffett made after markets crashed. Two were during the Global Financial Crisis (GFC), and one was a few years later.

General Electric (NYSE: GE)

In 2008, amid the GFC, the General Electric share price shed more than 30% of its value.

Around that time, Buffett's Berkshire Hathaway invested $3 billion in the multinational conglomerate.

It would prove to be an incredibly fruitful deal for Berkshire Hathaway and its shareholders.

By 2018, Buffett could claim that his $3 billion investment had provided a profit of about $1.5 billion, representing a 50% return.  

Goldman Sachs (NYSE: GS)

In September 2008, also amid the GFC, shortly before his investment in General Electric, Buffett's Berkshire Hathaway acquired a 10% stake in Goldman Sachs.

At that time, shares in the bank were trading at around USD$150.

When Berkshire Hathaway sold its stake at the start of the pandemic in 2020, it collected a profit of around USD$3 billion.

Bank of America (NYSE: BAC)

A few years after the start of the GFC, another financial crisis rattled markets.

Concerns about the level of the US government's spending led to the US debt ceiling crisis.

The Bank of America share price took a hit.

At the start of 2011, Bank of America shares were trading at around $14.

By the end of the year, the bank's share price had plummeted, losing more than 50% of its value.

Amid the steep declines, Buffett saw an opportunity.

Berkshire Hathaway pumped $5 billion into the ailing bank and continued to increase its holdings over the years.

Towards the end of last year, reports of Berkshire Hathaway reducing its stake in Bank of America began to emerge.

In October 2024, it was reported that Berkshire Hathaway had downsized its position in Bank of America by 26%.

Around that time, Bank of America shares were changing hands for more than $40 each.

Clearly, Buffett knows not only when to buy but also when to sell.

The post Warren Buffett's greatest GFC investments, what can we learn? appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), is known for its ability to find value in the markets. That's why when it makes a move to buy a stock, many investors often follow suit, feeling confident that Buffett or Berkshire's other managers saw some considerable value there.

On the flip side, investors may grow concerned when they don't see a lot of buying activity, and Berkshire's cash balance has been growing instead. They may be reading into that trend as a sign of cause for concern in the markets. And with Berkshire's cash balance indeed rising, should investors be worried about the stock market?

Is this a time to sell off your stocks and wait for better economic conditions?

Berkshire's cash reaches a new record

It's no secret that Berkshire Hathaway's cash balance has been growing. Every quarter, it reports on its cash and short-term investments, and in the past Buffett has suggested that he wouldn't be surprised to see the balance continue to rise. And that has indeed been happening -- its cash was at record levels of around $277 billion as of June 30.

BRK.A Cash and Short-Term Investments (Quarterly) data by YCharts.

This sharp increase in Berkshire's cash comes as the company has been selling off shares of multiple companies, including Apple and Bank of America. Tech company and iPhone maker Apple has accounted for close to half of Berkshire's holdings in the past. Today, it makes up a more modest 29% of all investments.

Is this a sign that Buffett is worried about the markets?

Selling shares of some of his top investments may seem alarming to investors, especially with recent concerns of a recession on the rise. Economic conditions are worsening, and now expectations are that the Federal Reserve will cut rates in the near future -- it's just a matter of how steep and how many cuts there will be rather than whether there will be any at all this year.

But Buffett has remained invested in stocks throughout worse and more concerning periods in the past (even wars). He doesn't sell due to economic conditions or forecasts. His stock sale of Apple, for instance, may have more to do with concerns about capital gains taxes increasing and what effect that may have on Berkshire's shareholders than anything else. There's no indication to suggest that he suddenly thinks Apple has become a worse company to invest in or that it has somehow lost its competitive moat and ability to dominate the market. It is, after all, still the top holding in Berkshire's portfolio.

What is notable is that amid all the selling of Apple and, to a lesser extent, Bank of America stock, Berkshire is simply holding onto its cash load; it isn't taking big positions in new companies. It has added Ulta Beauty to its portfolio recently, but for the most part Berkshire hasn't been buying up shares of other stocks. This could be a sign that Buffett isn't seeing tremendous buying opportunities right now, perhaps because valuations have become too inflated.

S&P 500 P/E Ratio data by YCharts. P/E = price to earnings.

Aside from 2020, which was an unusual time in the markets due to the emergence of COVID-19, the S&P 500 does appear to be trading at a fairly high valuation today. And if that weren't the case, I would certainly have expected Buffett to be buying up more stocks with all that cash on hand.

Investors shouldn't ignore valuations when picking stocks

Even if you're bullish on a company's long-term prospects, that doesn't mean you should ignore its valuation. A stock that trades at a high premium could mean it takes a while for you to earn a good return on your investment because investors have already paid for and priced a lot of future growth into its valuation. There's also minimal, if any, margin of safety that comes with stocks that are trading at high premiums.

Investors shouldn't try timing the markets or waiting for Berkshire to make big moves before deciding to buy stocks. But it would be prudent and worthwhile to consider the premium you might pay for a stock before adding it to your portfolio. If it looks excessive, it may be better to put that investment on a watchlist rather than buy it.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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One of the bigger storylines in financial headlines as of late revolves around some big moves made by Berkshire Hathaway CEO, Warren Buffett.

According to Berkshire's latest quarterly earnings filing, the investment firm sold nearly half its stake in Apple (NASDAQ: AAPL). Considering Apple is Berkshire's largest position by a wide margin, seeing such a significant sale of the stock warrants some attention.

On top of that, a series of recent Form 4 filings revealed that Berkshire also offloaded a good chunk of one of its favorite dividend stocks, Bank of America (NYSE: BAC).

While this level of portfolio allocation may seem surprising to some, the Oracle of Omaha may have been signaling to investors that these moves had been in the works for quite some time.

Let's break down why Buffett may have engaged in this selling activity and explore how it fits into the bigger picture as it relates to the economy.

A trip down memory lane

One of the cornerstones of Buffett's investing philosophy is to buy and hold quality investments over an ultralong time horizon. In fact, Buffett once proclaimed, "if you aren't thinking about owning a stock for ten years, don't even think about owning it for ten minutes."

Buffett first bought a stake in Apple in 2016. Considering he has owned a position in the iPhone maker for less than a decade, his recent sale of Apple looks a bit curious at first glance.

However, investors should not be too quick to forget the past. According to Berkshire's 13F filing from earlier this year, investors learned that Buffett also trimmed his Apple stake during the first quarter.

During Berkshire's annual shareholder meeting in May, Buffett revealed his rationale for the Apple sale. Per usual, his reasoning was quite simple and not wrapped up in mystery whatsoever.

Namely, Buffett alluded that he thought changes to the U.S. tax code were on the horizon. Based on the current state of fiscal policy, Buffett put forth the notion that "something has to give" and that "higher taxes are quite likely."

Simply put, Buffett was looking to take some profits off the table and avoid a heftier tax liability on his capital gains should his prediction come true.

While that same idea could be applied to his most recent sale of Apple stock, I think there are some other drivers influencing Buffett's calculations.

Wall Street doesn't like uncertainty

A lot has changed since Buffett made his prediction about the tax code three months ago. The first layer of the unknown that I'll unpack revolves around the dynamics of the upcoming presidential election.

According to predictive analytics website Polymarket, Vice President and current presidential nominee for the Democratic Party Kamala Harris holds a slight lead over Republican candidate Donald Trump.

The most recent model released by popular statistician and pollster Nate Silver suggests a similar line of thinking:

Today's update. Harris is *still* gaining on Trump on our national polling average, now 3.1 points.https://t.co/vsGVG18HHI pic.twitter.com/rK9UtQr9fO

-- Nate Silver (@NateSilver538) August 13, 2024

While I'm not here to predict the winner of the presidency, I do feel comfortable saying that the race's outcome appears a bit too close to call at the moment.

The second layer of economic uncertainty that's prevalent right now is interest rates. Economists all across Wall Street have been forecasting rate cuts from the Federal Reserve since the beginning of the year. But as of now, Fed Chairman Powell and his constituents have yet to implement a tapering strategy.

Why I think Buffett wins no matter what

Trying to identify the perfect moment to sell a stock is an exercise in false precision.

However, the possibility of rate cuts combined with differentiating policy decisions put forth by presidential nominees make quite the financial enigma. Considering these decisions can influence any given industry, it's not entirely surprising to see "smart money" offload equities and hoard cash as these scenarios continue to play out.

Even though Buffett may be leaving some potential gains on the table in Apple and Bank of America stock, the acclaimed investor isn't wasting his newfound capital.

According to Berkshire's second-quarter filing, the firm held $237.6 billion in U.S. Treasury Bills on its balance sheet as of June 30. I see this as an extremely smart move by Buffett for a couple of reasons.

First, both the S&P 500 and Nasdaq Composite have returned roughly 14% so far in 2024. Considering that is almost double the long-run average return of the S&P 500 (when accounting for inflation) and includes a recent sell-off, I don't blame Buffett for taking some gains in a volatile technology stock like Apple and reallocating the cash to a safer, more predictable asset in Treasury Bills.

Second, replacing some dividend income from both Apple and Bank of America with something more steady, such as U.S. Treasury Bills, isn't a bad idea. While both companies have steadily raised their dividend over many years, it's entirely possible that an economic slowdown could result in a sudden cut or halt to these payments. So, in a way, I think that Buffett is hedging this possibility by rolling over T-Bills and collecting a nice substitute for a dividend.

No matter what happens with the Fed, the election, the tax code, or the economy, Buffett has proven time and again that he knows how to make money in any situation. It'll be interesting to see if he makes any further adjustments following any Fed decisions or the election outcome.

But for now, I think the Oracle's decision to mitigate risk by holding onto cash and generating some passive income through Treasuries in lieu of new stocks will prove to be a wise one.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Any big move that Warren Buffett makes could be a front-page headline, and the investing community was buzzing over the weekend with the news that Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) sold almost half its Apple stock in the second quarter. That came on the heels of other large sales in the portfolio.

Let's see what's happening, and why Buffett might be a seller right now.

Is Buffett done with Apple?

At a glance, you might think Buffett may have lost some love for Apple, but consider the larger context and you'll see a different story. Even after the sale, Apple remains the largest equity holding in the Berkshire Hathaway portfolio, by far.

Buffett made waves with a sale of Apple stock earlier this year, too, reducing his Apple stake from 49% of the portfolio to 44%. At recent prices, it's down to about 28%.

Although he's cut his stake, Buffett speaks highly of Apple. At Berkshire Hathaway's annual shareholder meeting in May, he said he expected it to stay a part of his portfolio and said it's an even better business than two other longtime favorites, American Express and Coca-Cola.

This stock sale seems less about concern with Apple and more about something else.

Buffett has been selling other stocks, too

Buffett also made waves over the past few weeks with news that he sold a chunk of Bank of America stock in increments as well. In July, he sold $2.3 billion of BofA stock over six days. Bank of America still remains the second-largest holding in the Berkshire Hathaway portfolio and accounts for 11.7% of the total. He still obviously feels good about the bank, since he's completely exited positions in other banks in recent years.

One stock he keeps buying, though, is Berkshire Hathaway. The company spent nearly $2.6 billion buying back shares in the first quarter, continuing a pattern of investing in itself.

Keeping up with interest rates

Armchair analysts don't know for sure why Buffett has been selling stocks, or these stocks specifically. He hasn't said anything publicly. But he's said some things recently that can give investors clues. At Berkshire Hathaway's annual meeting, he said:

Unless something dramatically happens that really changes our capital allocation strategy, we will have Apple as our largest investment, but I don't mind at all, under current conditions, building the cash position. I think when I look at the alternative of what's available, the equity markets, and I look at the composition of what's going on in the world, we find it quite attractive.

Berkshire Hathaway can make an attractive return on the huge stockpile of cash that it holds via short-term Treasury bonds without exposing itself to risk. Mix that with a volatile stock market, and it makes a lot of sense to hold on to cash right now.

But there's another reason.

Ready to pounce?

Buffett looks for undervalued stocks that the market might miss (in addition to other features). But he's patient, and if there isn't anything that fits his investing criteria, he doesn't buy. At the annual meeting, he said: "There have been times in my life that I've been awash in so many opportunities that I could have invested everything by nightfall." But not lately: "We haven't seen anything that makes sense that moves the needle."

Does this point to a larger warning for the markets? Not necessarily. Holding on to cash is a good enough reason to hold out and wait for attractive opportunities. Even without high interest rates, Buffett has implied that he won't buy stocks if the value proposition isn't strong enough.

Could it be a warning for the markets? It could, because it signals that stocks are overpriced right now. Markets are bound for corrections if valuations become too high. It's a cycle that plays out over and over again. So while it could be a signal of a coming correction, or even something worse than a correction, it's not a signal to panic sell or even worry.

As always, investors can glean knowledge from Buffett's wisdom and investing approach. But you should remember that Buffett runs a publicly traded holding company, and that means his strategy will differ from that of the average investor. You can buy Berkshire Hathaway stock to benefit from his direct management, but for your personal portfolio, follow his general advice rather than his specific moves.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Last Thursday (US time), in another filing to the US regulatory body, Berkshire reported that it sold more shares of Bank of America Corp (NYSE: BAC) from 30 July to 1 August. As the disposal continues, Berkshire's holding in the bank has reduced to 12.15%.

Why is he selling the bank shares?

Warren Buffett keeps his lips tight and there could be many reasons why he's selling his banking shares.

One reason many pundits suspect is that he wants to keep his holding in Bank of America shares under 10%. As an owner of more than 10%, Berkshire has to report any transactions within two business days.

While this may be a reason, it doesn't explain Berkshire's sale of other banking shares, including Wells Fargo and JP Morgan. As highlighted above, the company is also selling Apple shares, piling up cash.

At the end of June 2024, Berkshire holds US$277 billion in cash, representing nearly 30% of its current market capitalisation of US$938 billion. This is a lot of cash.

This raises the question of whether Warren Buffett sees the outlook for the stock market and economy as gloomy. He famously said, "Be fearful when others are greedy, and be greedy when others are fearful." Is he implying that the market is too greedy now?

Implications for ASX banking shares

While he doesn't own ASX banking shares directly, this might be a good time for a reality check.

Surely, ASX banking shares had a fantastic run over the past year. Let's first look at their valuations. Based on S&P Capital IQ earnings estimates for FY25:

• Commonwealth Bank of Australia (ASX: CBA) shares are valued at a price-to-earnings (P/E) ratio of 23x and a price-to-book (P/B) ratio of 2.9x
• ANZ Group Holdings Ltd (ASX: ANZ) shares are valued at a P/E of 12.7x and P/B of 1.2x
• National Australia Bank Ltd (ASX: NAB) shares are valued at a P/E of 16.3x and P/B of 1.8x
• Westpac Banking Corp (ASX: WBC) shares are valued at a P/E of 15.1x and P/B of 1.4x

These valuation levels are generally at the high end of their historical trading ranges, which has led to debates among experts on whether it is time to take profits on leading ASX banking shares such as CBA.

While the banking sector and the broader ASX index are trading lower this morning, Macquarie sees a 'tactical buying opportunity' in ANZ shares. As the Australian highlighted, Macquarie analysts "continue to see all banks as expensive", but ANZ shares might present a buying opportunity if the underperformance continues.

The S&P/ASX 200 Banks Index (ASX: XBK) is down 3% this morning.

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In fact, the last dividend Berkshire paid out was back in the 1960s. Buffett has even joked that he must have been in the bathroom when the payment was approved.

Ever since then, Berkshire shareholders haven't received a single dollar of dividend income.

But that doesn't mean Buffett himself is averse to receiving dividends. In fact, Berkshire is probably one of the largest single recipients of dividend income in the world. Our Foolish colleagues in Buffett's home country of the United States estimated back in June that Berkshire is on track to bank more than US$6 billion in passive dividend income over the coming 12 months.

What's even more mindboggling is that it is estimated that US$5.17 billion of that passive income will be coming from just seven underlying shares in Berkshire's portfolio.

Those Berkshire bankrollers are as follows:

• Occidental Petroleum Corp (NYSE: OXY)
• Bank of America Corp (NYSE: BAC)
• Apple Inc (NASDAQ: AAPL)
• Chevron Corporation (NYSE: CVX)
• Coca-Cola Co (NYSE: KO)
• Kraft Heinz Co (NASDAQ: KHC)
• American Express Company (NYSE: AXP)

So Buffett is someone who evidently knows a thing or two about building a stream (in this case a raging torrent) of passive income.

But how can we take Warren Buffett's experience to our own ASX and build a stream of passive income from ASX dividend shares that will last a lifetime, as Buffett's has?

Building a Buffett-inspired passive income portfolio

I think there are two key lessons here.

The first is that investors should find high-quality dividend payers that have the financial strength to raise their dividends over time in a meaningful, inflation-beating way.

Take Apple and Coca-Cola. Apple only started paying its investors dividends in 2012. But since then, it has increased its annual payouts substantially every year. Just this year, the technology titan boosted its quarterly dividend payouts by 4.35% from 23 US cents a quarter to 24 US cents.

Meanwhile, Coca-Cola has one of the best dividend growth streaks in the world, having just raised its annual dividend for the sixtieth (yes, 60) year in a row.

The second is that investors should seek a wide range of these quality passive income payers. You'll notice that of those seven Berkshire bankrollers listed above, two are oil shares (Chevron and Occidental), one is a tech stock (Apple), two are financials stocks (Bank of America and American Express), and two are consumer staples giants (Coke and Kraft-Heinz).

Buffett, and Berkshire by extension, is thus able to rely on a wide range of top-tier companies that all operate in different corners of the market. This reduced the portfolio's single-sector risk substantially and ensures that Berkshire's stream of passive income remains strong.

I myself attempt to incorporate these two lessons into my own passive income portfolio. That's why I invest in a range of high-quality shares like Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES), National Australia Bank Ltd (ASX: NAB), MFF Capital Investments Ltd (ASX: MFF), Telstra Group Ltd (ASX: TLS), and Endeavour Group Ltd (ASX: EDV).

Collectively, I hope these companies will be half as kind to me in terms of generating passive income as Buffett's investments have been to him.

The post Here's how I'd use the Warren Buffett method to target lifetime passive income from ASX shares appeared first on The Motley Fool Australia.

He's the poster boy for growth investing, perhaps more precisely growth-at-a-reasonable-price (GARP). 

However, if you look closely at how his investment vehicle Berkshire Hathaway Inc (NYSE: BRK.A) rakes in dividends, you might think differently.

The Motley Fool US reported earlier this year that the company is due to collect a whopping US$6.1 billion of dividends in 2023 from just a handful of stocks.

Recently The Motley Fool US' Keith Speights profiled five of these income stocks that Buffett relies on.

For those Australians that dabble in ASX shares, it's easy enough to try to replicate what the world's most famous investor does.

Here are my five ASX dividend shares that are similar to Buffett's beauties:

1. Apple Inc

The tech giant is Berkshire Hathaway's largest position currently.

Within the ASX, I think online jobs classifieds platform Seek Ltd (ASX: SEK) has similar qualities to Apple Inc (NASDAQ: AAPL).

Seek has been one of the leaders in the Australian technology scene over the past 26 years, and has delivered much handsome capital growth for investors.

But, as a mature company, it also spits out a small but useful fully franked dividend yield of 2%.

That's actually better than Apple's yield of just 0.5%.

2. Bank of America

According to Speights, Buffett has recently gone cool on the banking sector but Bank of America Corp (NYSE: BAC) seems to be an exception.

"After Buffett bought more BofA shares in the first quarter of 2023, Berkshire now owns close to US$29.6 billion of the stock."

For me, Macquarie Group Ltd (ASX: MQG) is the ever-reliable financial giant that can match it with the likes of Bank of America.

In fact, over the past five years stocks of the Aussie investment bank have done far better than its American counterpart.

Over that time the Macquarie share price has risen 40.4%, while Bank of America has actually lost almost 1%.

The Australian company pays out better dividends too, with a current 4.3% yield of which 40% is franked. That compares to 3.1% for Bank of America.

3. American Express

The credit card company is one of Buffett's oldest holdings, according to Speights.

"The legendary investor first bought shares of American Express Company (NYSE: AXP) for Berkshire's portfolio three decades ago," he said.

"Amex is also one of Berkshire's biggest positions, with a valuation of over $26 billion."

For me that durability is matched on the ASX by the likes of Washington H Soul Pattinson and Co Ltd (ASX: SOL).

Soul Pattinson is well-known for constantly hiking its dividends each year. In fact, that streak hasn't been broken since 2001.

Add to that share price appreciation of 646% since November 2001 and full franking of the dividends, and you have yourself an enduring winner.

4. The Coca-Cola Company

Perhaps one of the most famous symbols of American consumerism, I think the beverage giant's equivalent on the ASX is supermarket chain Coles Group Ltd (ASX: COL).

Much like Coca-Cola Co (NYSE: KO), the Australian supermarket chain enjoys loyal patronage through economic downturns.

And Coles plays in a near-duopoly, which is a market position similarly strong to Coke.

As recession fears have played out, the Coles share price has soared more than 9.1% higher year to date.

The supermarket pays out a more-than-handy dividend yield of 3.35%, which is fully franked no less. 

This beats Coca-Cola's yield of 3.1%.

5. Chevron Corporation

According to Speights, the oil and gas company is Berkshire Hathaway's fifth biggest investment, even after it sold some off earlier this year.

Chevron Corporation (NYSE: CVX) is one of Buffett's best income producers, with a dividend yield just shy of 4%.

For mine, Whitehaven Coal Ltd (ASX: WHC) is an Australian match.

Both stocks are obviously correlated to energy and oil prices, which in turn fluctuate according to the economic cycle and the whims of OPEC.

Both produce energy that will be valuable as the world awaits renewable infrastructure to play catch up and to backfill the missing supply from Russia.

The Whitehaven share price has gained a handsome 40% over the past year, while paying out a stunning dividend yield of 10.7% fully franked.

That's the sort of income that US stocks can rarely match.

The post Warren Buffett has $400 billion invested in these 5 dividend stocks. Here are some ASX shares I think are similar appeared first on The Motley Fool Australia.

Berkshire may have dozens and dozens of shares in its bulging portfolio. But Buffett gets the vast majority of his dividend income from just a few of those.

So today, let's look at three of Buffett's largest dividend stocks, and some possible ASX equivalents that we can look to for our own dividends here on the Aussie share market.

3 of Warren Buffett's best dividend stocks

Kraft Heinz Co (NASDAQ: KHC)

Kraft Heinz is one of Berkshire's more controversial holdings. Buffett himself helped engineer the merger that brought Kraft and Heinz together back in 2015. But since then, this company has had its fair share of ups and downs. Between 2017 and 2020, shareholders watched as the company shed 75% of its value.

In saying that, Kraft Heinz has kept the support of Buffett, who hasn't sold a single share. The company appears to be slowly on its way up too, having gained almost 75% since its 2020 lows.

Today, Berkshire would be enjoying the 4.13% dividend yield that Kraft Heinz stock currently offers. The closest ASX equivalent to this food giant is probably Bega Cheese Ltd (ASX: BGA). Not only does Bega have a popular range of Australian food products, including Vegemite, but its portfolio of drink brands (including Dare, Vitasoy, and The Juice Brothers) also gives it some semblance to another Buffett favourite, Coca-Cola Company.

Bank of America Corp (NYSE: BAC)

Buffett has long loved bank stocks, but Bank of America remains Berkshire's only holding as of today. Bank of America is one of the most dominant financial institutions in the United States and the world, only behind JP Morgan Chase.

This one provides an easy comparison. The ASX's equivalent to his investment would probably have to be Commonwealth Bank of Australia (ASX: CBA), which is generally regarded as the ASX's highest-quality bank share. Another option could be the second largest ASX bank, National Australia Bank Ltd (ASX: NAB).

ASX investors might be grateful that both CBA's and NAB's dividend yields come in far ahead of BoA though. Right now, CBA shares are offering a fully franked yield of 4.27%, and NAB, 6.15%. That looks pretty good against Bank of America's 3.13%.

Chevron Corporation (NYSE: CVX)

Buffett clearly loves oil stocks, with both Chevron and Occidental Petroleum forming large chunks of Berkshire's portfolio at present. Chevron is a famous US dividend stock. It is even a rare dividend aristocrat, having increased its annual dividend payments every year for 36 years.

Perhaps Buffett's pick of the ASX oil shares would be Woodside Energy Group Ltd (ASX: WDS). Woodside is the clear market leader when it comes to ASX oil stocks, thanks to its blockbuster merger with the petroleum division of BHP Group Ltd (ASX: BHP) last year. This merger made the company the seventh largest on the S&P/ASX 200 Index (ASX: XJO).

Although Woodside can't boast of such an impressive divided streak as Chevron, it still smashes the yield you can get on Chevron stock today. Chevron currently offers a dividend yield of 3.84%, which pales in comparison to Woodside's fully franked 10.72% trailing yield.

The post 3 high-yield dividend stocks Warren Buffett owns (and 3 similar on the ASX) appeared first on The Motley Fool Australia.

Luckily for us, his stock selections are public knowledge because the investment company he runs, Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B), is listed. So, we get regular updates on his holdings.

Here are Buffett's top 10 stocks by value, according to Berkshire Hathaway's FY22 full-year results released in February.

Top 10 stocks that Warren Buffett owns

What are the lessons for investors buying ASX 200 stocks? 

Buy large-cap ASX 200 stocks

Buffett's top 10 holdings are full of multi-billion-dollar global companies that own household-name brands.

Obviously, he's extremely positive on Apple given the almost 40% allocation of his total portfolio!

He refers to Apple as Berkshire Hathaway's "third-largest business" after its wholly-owned insurance and railroad companies. He reckons Apple is "probably the best business I know in the world".

You could also say he's in love with Bank of America, Chevron, and American Express, given they and Apple together comprise an astonishing 68% of the investment pie!

Large-cap companies are typically industry giants with large valuations (or market capitalisations). Their sheer size is a big factor enabling them to weather all types of economic conditions.

This means safety and stability for the investor.

As mature companies, their share price growth may be limited unless they are in rapidly growing and evolving industries, such as technology (like Apple), or have a global market for their products (also like Apple).

The trade-off in the limited share price growth is strong, reliable, and regular dividends. This makes them a favourite choice among income investors and those who want lower-risk investments.

Fun fact: Buffett's Coca-Cola investment returns $704 million in annual dividends.

The three biggest large-cap ASX 200 stocks available to investors are BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and CSL Limited (ASX: CSL). 

Buy and hold high-quality businesses for the long term

Buffett is a value investor, meaning he targets high-quality businesses and buys them when they are trading below their intrinsic worth or book value.

He also describes himself as a "business picker" rather than a "stock picker".

That means he uses fundamental analysis to get a real understanding of the companies he is considering buying, and to keep tabs on the ones he already owns. He spends most days in his office reading.

Buffett buys long, which means he's patient. He doesn't get caught up in the day-to-day price movements of his investments based on announcements with short-term share price ramifications.

Buffett's strategy means he has fun in both bear markets and bull markets. How smart is that?

Bear markets provide opportunities to buy below value, and bull markets power up those share prices.

A few examples of long-term holds within Buffett's top 10 stocks are Bank of America, which he first purchased in 2011, American Express (1964), Moody's (2000), and Coca-Cola (1988).

He bought Coca-Cola just months after the Black Monday 1987 market crash. He saw an opportunity to nab a high-quality business while the share price was down, and he went hard too — putting $1 billion into the stock. That's a big number today, let alone back in 1988!

There's also a lesson in moving with the times and adapting your investments in accordance with general business and societal trends, such as the rise of technology.

Buffett first bought Apple in 2016 and Activation Blizzard in 2021. Apple is the biggest US tech stock and Activation Blizzard is in the top 30.

The biggest ASX 200 information technology stocks are WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO). But they're babies in size compared to the big US tech stocks.

Keep cash on hand for opportunities

As we covered last month, Buffett moved US$23.3 billion (A$35 billion) from the market into cash between 30 June and 31 December 2022.

Berkshire Hathaway went into 2023 with cash, cash equivalents, and treasury securities (bonds) worth US$128.7 billion.

In his annual newsletter released in February, Buffett explained:

As for the future, Berkshire will always hold a boatload of cash and U.S. Treasury bills along with a wide array of businesses.

We will also avoid behavior that could result in any uncomfortable cash needs at inconvenient times, including financial panics and unprecedented insurance losses.

Spare cash means you can enjoy some satisfying dollar-cost averaging on ASX 200 stocks when the market is down.

Let's talk about diversification

In total, Buffett has 49 stocks in his portfolio, which sounds like a lot. But it's not when you look at the enormity of the whole pie (about US$340 billion).

In short, he's got huge sums invested in each of those 49 stocks. Using the top 10 as an example, if one of those companies goes bust, he'll lose billions. That's probably why they're all large caps. The likelihood of a large cap going under is incredibly small, so perhaps that's why Buffett feels safe to invest big.

Things look a little different when you're an ordinary investor with, say, $50,000 in ASX 200 stocks. You can't really afford to make mistakes and not having a diversified portfolio is a huge one for us.

We should point out that Buffett has good diversification across different industries.

Diversification is important because it gives you safety. The more ASX 200 stocks you hold and the more industries you are exposed to, the lesser your risk.

We don't know what is around the corner. Imagine holding a portfolio full of travel stocks in early 2020.

A quick way of ensuring you have great diversification is not to bother trying to pick ASX 200 stocks at all. Instead, take Buffett's advice and buy a low-cost S&P 500 index fund instead.

That's his key recommendation for ordinary investors looking to set themselves up for retirement.

The S&P/ASX 200 Index (ASX: XJO) closed the session yesterday at 7,362.2 points, down 0.05%.

The post Which stocks does Warren Buffett own (and what can ASX 200 investors learn from this)? appeared first on The Motley Fool Australia.

After taking over Berkshire in the mid-1960s, Buffett transformed the textiles company into a diverse powerhouse, owning many businesses outright and with significant investments in many other public companies.

Buffett's love of his investments is also well known. He even likes to remind shareholders of his commitment to the Coca-Cola Co (NYSE: KO) by typically sporting a can or a bottle at Berkshire's annual general meeting every year.

Berkshire Hathaway's massive portfolio

Berkshire owns stakes in more than 50 different publically-traded shares. But it might surprise investors to learn that almost 74% of Berkshire Hathaway's public investing portfolio is concentrated in just five companies. That's according to the company's latest 10Q filing, which is accurate as of 30 September.

Some famous names appear in Berkshire's list. There's Amazon.com Inc (NASDAQ: AMZN), Johnson & Johnson (NYSE: JNJ) and Visa Inc (NYSE: V). Buffett also owns chunks of Activision Blizzard Inc (NASDAQ: ATVI), Chinese electric vehicle manufacturer BYD Co Ltd and the relatively new-to-the-markets Snowflake Inc (NYSE: SNOW).

But none of these companies even come close to Buffett's top five holdings.

They are (from largest):

1. Apple Inc (NASDAQ: AAPL)
2. Bank of America Corp (NYSE: BAC)
3. Chevron Corporation (NYSE: CVX)
4. Coca-Cola Co
5. American Express Inc (NYSE: AXP)

So what can we learn from this?

What can we learn from Warren Buffett?

Well, a few things to point out. Some of these holdings, namely Coca-Cola and AmEx, are old Buffett favourites. Buffett first bought Coca-Cola shares back in the 1980s. His investment in American Express goes back even further to the 1960s.

But others are far newer. Apple is by far Berkshire's largest investment. The company has more than US$128 billion worth of Apple shares, which carves out a whopping 39.7% of Buffett's entire public portfolio. Yet Buffett only began buying Apple shares back in 2016. His Chevron stake is even newer, with Berkshire picking up its first shares in the midst of COVID-ravaged 2020.

So Buffett is clearly an investor that holds onto his favourite shares through thick and thin. American Express is a company that has had many, many ups and downs since Buffett first bought in back in the '60s. Yet Buffett has always stayed the course. Ditto with Coca-Cola.

But he is also an investor who knows how to jump on a trend. Buffett clearly saw the post-COVID collapse in global oil prices as an incredible opportunity.

It only took him two years to build Chevron into Berkshire's third-largest position – one worth US$31.2 billion today. And Apple has gone from absent to Berkshire's largest holding in just a few years as well.

So Warren Buffett is clearly an investor who likes to hold his favourite shares forever. But he is also one that isn't afraid to jump on a trend or a new idea and quickly build it into a sizeable position.

Perhaps above all, Buffett's Berkshire portfolio shows that he is just fine with having 40% of his portfolio in his favourite company: Apple. There are more than a few lessons we mere mortals can take away today.

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There's a reason so many investors want to own Warren Buffett stocks.

The so-called Oracle of Omaha has trounced the market in his long history an investor. Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has nearly doubled the annual return of the S&P 500 for nearly 60 years, and thanks to the magic of compounding, that means Berkshire has returned more than 100 times what the S&P 500 has in that time frame.

Luckily, for investors, Warren Buffett's playbook is wide open, and he's made it clear what kinds of stocks he favors. Here are five simple questions to ask to determine if a stock would get the Buffett stamp of approval.

1. Does it have an economic moat?

Buffett's favorite concept in all of investing may be the "economic moat," or what most investors call a sustainable competitive advantage. Buffett once said, "The most important thing [is] trying to find a business with a wide and long-lasting moat around it, protecting a terrific economic castle with an honest lord in charge of the castle."

As he alludes to in that statement, this key attribute protects the company from competitors. Buffett likes stocks with well-known brands such as Coca-Cola or Apple; companies with limited competition and barriers to entry, like the railroad BNSF that he acquired a decade ago; or companies with strong market share and recurring revenue, like GEICO.

If you want to know if it's a Buffett stock, ask yourself if the company can withstand competition over a long period of time.

2. Does it produce cash?

Buffett doesn't generally waste his time with unprofitable growth stocks. He looks for companies that generate cash. 

Buffett likes to own businesses like insurers that produce cash in premiums that come in advance of claims. He refers to this as a "float" that allows him to reinvest that cash in stocks. He also likes sectors such as energy (for example, Chevron stock), which generate high levels of cash flow when oil prices rise. Buffett's a fan of banks and financial companies like Bank of America and American Express that have reliable profit generation from commercial lending, and he's known to invest in utilities and healthcare, which tend to generate steady cash flows.

What you'll find among almost every Buffett stock is that they produce reliable cash flow, and many of them pay a dividend. 

3. Does it have a long track record? 

Warren Buffett doesn't generally chase the latest trends whether they be dot-com stocks in the 1990s or cloud software stocks more recently.

Instead, he prefers to own companies with long track records and operating histories. Often, he's studied these companies for years, or is well-acquainted with their brands. With Coca-Cola, for example, he had seen its success for 50 years before becoming an investor. When Buffett decided to invest in tech, he bought stock in IBM, because he'd followed it for decades and understood the business. While that investment didn't pan out, it nonetheless reflects Buffett's approach of studying a company for a long time.

Similarly, in financials, he prefers legacy banks over fintech, because banks have proven their business models over long periods of time. Not only are they less risky, but they also generate reliable cash flow.

4. Does it outperform in bear markets?

Historically, Berkshire has best demonstrated its fortitude during bear markets. Buffett hoards cash to buy stocks when they're cheap, and he's known for taking advantage of sell-offs like during the financial crisis when he took a high-yielding stake in preferred stock in Bank of America. Berkshire has also outperformed the stock market by a wider margin in bear markets, including this year.

Because many of Buffett's favorite stocks have stood the test of time, they tend to do well in bear markets, and many of his favorite industries -- including consumer staples, insurance, utilities, and healthcare -- are known for being recession-resistant.

Buffett doesn't exclusively buy recession-proof stocks. He owns cyclical stocks in industries like energy, banking, and industrials, but in general, he prefers to buy stocks that can outperform in bear markets or at least have demonstrated an ability to recover from them.

5. Is it a good value?

Finally, Buffett is a classic value investor. He wants to buy stocks that are trading below their intrinsic value, which is typically estimated with a discounted cash flow model.

The quality of the company is more important to the Berkshire chief than the price. He has famously said, "It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

However, if he finds a stock he likes, he'll only buy it if he believes it's a good value at the current price. In the bull market during the 2010s, Buffett often lamented that stocks had become too expensive. With prices now down, it wouldn't be surprising to see Berkshire deploying its cash hoard, which is currently worth more than $100 billion.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is it a Warren Buffett stock or not? 5 simple questions to ask yourself appeared first on The Motley Fool Australia.

Volatility has been the name of the game over the past three trading days, in moves mirrored here by the S&P/ASX 200 Index (ASX: XJO).

Last Thursday, the S&P 500 Index (SP: .INX) ended the day up 2.6%, after initially tumbling 2% on open following higher-than-expected inflation figures. Those moves were reversed on Friday when the S&P 500 finished down 2.3%.

But investors in the US stock markets shook off that malaise yesterday (overnight Aussie time) to again send the S&P 500 up 2.7%. Tech stocks fared even better, with the Nasdaq Composite (NASDAQ: .IXIC) closing up 3.4%.

Reaching for your Dramamine yet?

What's happening with the US stock market?

Investors and traders alike appear to be on a knife edge over whether markets are signalling a bottom or whether there's more downside to come.

Last week's volatility was driven by the higher-than-forecast September inflation data. The rally on that higher data looks to have been caused by a wave of short-sellers needing to cover their positions when they were caught on the wrong side of the trend.

The next day's steep losses came as more of a direct response to those inflation numbers.

Which brings us to Monday.

The big lift in US stock markets yesterday was partly fuelled by expectation-beating earnings results from Bank of America Corp (NYSE: BAC).

A 13% year-on-year lift in credit card spending at the bank, coupled with falling delinquencies, showed US consumers remained resilient in the face of rising rates and high inflation.

Bank of America, with a market cap of some US$270 billion (AU$428 billion), closed up 6% on the results, helping drive the US stock market to another big day of gains.

The US stock market also got a boost from the United Kingdom. Investors were clearly pleased that many of the dramatic economic policies proposed by prime minister Liz Truss have been rolled back.

Topping it off, the recent big price swings also have analysts pondering whether markets are signalling that a bottom is forming.

Here's what the experts are saying

Commenting on the big moves in the US stock market, Phil Blancato, CEO of Ladenburg Thalmann Asset Management, said (courtesy of Reuters):

The information coming out of the banks are much better than anticipated. Even though there was a drop in earnings they're making significant income on their cash. So this recession is not a consumer-based recession. It's not a bank-based recession if you can even call it one. It's simply a cyclical slowdown.

Those are the best because they generally take around 10 months to recover which is right where we are. Inflation is not slowing the economy down. If we get any kind of recession it's mild. For that reason, when you look at stocks trading now below their P/E [price to earnings] averages, stocks are fairly valued again and offer a good opportunity.

Siddharth Singhai, chief investment officer at Ironhold Capital, didn't share that bullish sentiment on the US stock market.

"This seems to be a faux rally fuelled by lower inflation expectations, I don't think the rally makes sense. Interest rate hikes are not getting discounted by the market," he said.

Peter Tuz, president of Chase Investment Counsel, added (quoted by Reuters):

I was thinking that the bank earnings, especially Bank of America, was really pretty optimistic, and that coupled with the abandonment of restrictive policies in England just seemed to be the fuel that got the market going this morning.

There were some pretty rough days last week… The choppiness and volatility that we are seeing is part of the bottoming process. The fourth quarter generally is pretty good for markets historically.

If the US stock market, and by extension the ASX 200, is indeed in the process of forming a bottom, investors can expect more volatility during the rebound.

As with combatting motion sickness on a boat, the best bet is to keep your eyes fixed on the horizon and not fret about the daily ups and downs.

The post Bank or bust: What on earth is going on with the US stock market? appeared first on The Motley Fool Australia.

In early morning trade, the benchmark index is up 1.4%.

ASX 200 shares have been unusually volatile over the past few days, closing 1.4% lower yesterday after finishing 1.8% higher on Friday.

So, what's going on?

Why are ASX 200 shares rocketing today?

ASX 200 shares are again closely following the action taking place in US markets.

Yesterday, overnight Aussie time, saw the S&P 500 Index (SP: .INX) finish up 2.7%.

Investor enthusiasm looks to have been sparked on a number of fronts.

First, Bank of America Corp (NYSE: BAC) reported its results and earnings at the bank, with a market cap north of US$270 billion, came in ahead of consensus expectations. Bank of America closed up 6% on the results and helped drive the broader bullish sentiment.

It also appears that the big swings we've seen on the S&P 500, mirrored here by ASX 200 shares, have some traders speculating that markets may be signalling the bottom is in.

And then there are the goings on in the United Kingdom, where a number of market-shaking policies put forward by newly minted prime minister Liz Truss have been axed.

What the experts are saying

Commenting on the surge in US markets, and by extension ASX 200 shares, Jason Paltrowitz, director of corporate services, OTC Markets Group, said (courtesy of Reuters):

It's a combination of factors. Obviously, the positive BofA earnings as well as others have caused positive movement – while EPS [earnings per share] growth is lower than previous quarters, it's better than expected. Additionally, Friday's sell off was about uncertainty and not wanting to hold positions over the weekend. The start of the week has that money back in the market.

Peter Tuz, president of Chase Investment Counsel, added:

I was thinking that the bank earnings, especially Bank of America, was really pretty optimistic, and that coupled with the abandonment of restrictive policies in England just seemed to be the fuel that got the market going this morning.

There were some pretty rough days last week… The choppiness and volatility that we are seeing is part of the bottoming process. The fourth quarter generally is pretty good for markets historically.

Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, sounded a note of caution (quoted by Reuters).

"I think this is more a sign of more volatility to come," he said. "I don't think this is a sign of a bottom because we are not seeing real sustained long-term buyers come in… Most of the flow that we are seeing just today is people re-engaging hedges and shorts."

Time will tell whether the lift in US stocks and ASX 200 shares today is a bear market rally or a more sustainable leg up based on a bottom forming.

There are plenty more earnings results due from major US stocks over the coming two weeks. Whether share markets trend higher or lower over those weeks, I expect we're not through with the volatile swings quite yet.

The post Why are ASX 200 shares going gangbusters on Tuesday? appeared first on The Motley Fool Australia.

Recessionary concerns, a few lackluster quarters, overpromised and underdelivered projections, and a tech crash have absolutely crushed payment processing giant PayPal Holdings, Inc. (NASDAQ: PYPL) this year. Shares are trading 67% lower than last year.

A drop like this is understandably concerning for investors, but there are several reasons it could also be a tremendous buying opportunity. Here's a closer look at why investing at today's rock-bottom prices is a genius move right now.

Making the right moves

The second quarter of 2022 was PayPal's first non-profitable quarter since its spinoff from eBay Inc.(NASDAQ: EBAY) in 2015. Its earnings per share (EPS) fell to a loss of $0.29 per share from a gain of $1.01 last year, and its operating margin dropped by around 7%.

This loss wasn't because the company did less business -- in fact, revenue was 9% higher than last year. It was related to higher costs of borrowing and increased operational costs, as well as one-time charges from new products in PayPal's investment portfolio.

On the positive side, free cash flow was up 22% year over year. Payment transactions rose 16%, boosting total payment volume (TPV) by 9%. And PayPal is directly addressing the increased cost of borrowing and operating with targeted cost-saving measures. The company plans a $900 million cost-saving initiative that should help improve its bottom line.

The fintech company also has $15.6 billion in cash and cash equivalents, and only $13.6 billion in debt, including its latest round of issuance.

Recent upgrades mean prices are likely to rise

PayPal's focused moves to improve its operational costs have given analysts a fresh outlook on the stock, prompting those from Bank of America Corporation (NYSE:BAC) and Raymond James to upgrade their ratings on PayPal over the past few weeks. Share prices haven't jumped much in response, up just 1.5% from before the upgrades, but the analyst moves are a positive sign that investor confidence may also be returning. During that same time, the S&P 500 index was down 1.5%.

Cost savings alone are not going to be enough to rally PayPal's share price back to previous highs. That will take time. Short-term headwinds will likely impact the company if a recession unfolds, as many experts are predicting. But if we think long-term, its growth prospects still look promising.

PayPal was the first payment processing company in the world. Reinventing the services it offers its customers so it can adapt to new technologies and grow is nothing new. It has sufficient cash on hand to help it withstand a downturn, and today's pricing means that investors are in an excellent position to profit if the company does make strides toward recovery.

As a long-term, patient investor, I personally believe PayPal is a genius buy right now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why buying PayPal is a genius move right now appeared first on The Motley Fool Australia.

Warren Buffett is one of the best investors of all time. Since 1965, Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B), the masterfully crafted conglomerate he helped build, has returned over 20% annually, creating fortunes for its share-owners along the way.

Berkshire's public stock portfolio is thus closely watched by investors seeking to build lasting wealth in the stock market. Investing alongside great investors can be an excellent strategy for those seeking outsize returns. Here are Buffett's largest stock holdings.

Apple: 41.6% 

Buffett once called Apple Inc. (NASDAQ: AAPL) "probably the best business I know in the world." That's high praise from the master investor, who has become one of the richest people in the world by carefully identifying elite businesses with powerful competitive advantages.

It's perhaps unsurprising, then, that Apple is Berkshire's largest position by far. Buffett's investment company owns more than 915 million shares of Apple that are currently valued at a staggering $142 billion. 

Buffett values Apple's beloved brand and sticky ecosystem. He has come to understand the iPhone's central place in the lives of more than 1 billion people. Buffett also knows that once someone buys an iPhone, they tend to buy other Apple products and services and remain a loyal customer.

Moreover, Buffett appreciates the tech titan's tremendous cash flow production. Apple generated more than $90 billion in free cash flow during just the first nine months of its fiscal 2022. That whopping sum allows Apple to reward its investors with a steadily rising dividend income stream and a massive stock buyback program. These share purchases have helped to boost Berkshire's ownership percentage of Apple's earnings over time, which Buffett applauds. 

Bank of America: 10.2% 

Bank of America Corporation (NYSE: BAC) is Berkshire's second-largest holding and another Buffett favorite. BofA, as the company is often called, accounts for over 10% of Berkshire's portfolio, a stake valued at roughly $35 billion. 

Buffett thinks highly of CEO Brian Moynihan, who has helped to strengthen BofA's operations following its near collapse during the Great Recession and financial crisis of 2007-2009. Since taking the helm on Jan. 1, 2010, Moynihan has prioritized risk management and a return to traditional banking fundamentals.

Although pandemic-related disruptions and a difficult macroeconomic backdrop have been challenging for BofA and other financial institutions, Buffett views the bank as a core, long-term holding. And over longer periods of time, top-tier banks tend to grow and profit along with the expansion of the overall economy.

To maximize its odds of success, BofA is cutting expenses in its traditional branch operations and investing aggressively in digital banking technology. This has positioned BofA to benefit from the boom in mobile banking and app-based transactions -- and gain market share from its less tech-savvy rivals.

With Bank of America's stock price down about 22% in 2022 due mostly to short-term recessionary fears, you currently have the opportunity to scoop up shares of this best-of-breed bank at a hefty discount.

Chevron: 7.8% 

The oil sector has recently become the apple of Buffett's eye. It's easy to see why. Energy stocks tend to perform well during inflationary times. And Chevron Corporation (NYSE: CVX) is particularly well positioned to profit from higher oil and gas prices.

The war in Ukraine is driving many countries in Europe and around the world to seek out new sources of dependable energy supplies. Chevron is working to meet this vital global need for energy by ramping up its production of oil and liquified natural gas. 

The energy titan's profits, in turn, are soaring. Chevron's revenue surged 83% year over year to $68.8 billion in the second quarter, while its adjusted earnings rocketed 245% to $11.4 billion. Chevron is committed to passing on much of its profits to shareholders via a hefty dividend -- its shares currently yield 3.5% -- and stock buybacks.

These factors have no doubt contributed to Buffett's decision to make Chevron Berkshire's third-largest public stock holding. Berkshire owns more than 163 million shares of the oil and gas giant, a stake valued at nearly $27 billion. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 60% of Warren Buffett's portfolio is invested in these 3 stocks appeared first on The Motley Fool Australia.