Recent reports show that many well-known fund companies are selling large technology stocks significantly. Buffett and Soros reduced their holdings in the "Magnificent Seven" technology giants and increased their shareholdings in cash to prepare for a market downturn. In terms of product structure, the operating income of 10-30 billion yuan products is 401/1288/60 million yuan respectively.

The latest inflation data in the United States has diminished concerns about the US economic downturn, and investors are flowing back into the stock market. In the past week, the US stock market rebounded and pulled stocks back from what seemed like a deeper correction. However, there are still signs that a larger correction is coming.

Large technology stocks have been heavily sold by well-known funds.

Before the market turned from optimistic to pessimistic about the economic prospects of AI, some investors took advantage of this part of the increase in profits. In the first and second quarters of this year, the magnificent 7 became the symbol of this upward trend. The Bloomberg Seven Giants Price Return Index rose by 17% in both quarters. However, in the four weeks starting from July 10, the index fell by 14%. Drew Kirchhoff, who served as Soros's chief strategist for more than a decade, told CNBC in May that the AI boom may have been "overhyped" in the short term. Historically, the market experiences a correction of more than 20% about every 18 months. These healthy corrections provide an opportunity for the market valuation to reset from an overvalued state, which is also the reason why investors buy stocks again.$Alphabet-A (GOOGL.US)$,$Apple (AAPL.US)$,$Tesla (TSLA.US)$,$Microsoft (MSFT.US)$,$Amazon (AMZN.US)$,$Meta Platforms (META.US)$,$NVIDIA (NVDA.US)$But during the four weeks starting on July 10th.

Please use your Futubull account to access the feature.$NASDAQ 100 Index (.NDX.US)$Drew Kirchhoff, who served as Soros's chief strategist for more than a decade, told CNBC in May that the AI boom may have been "overhyped" in the short term.

Soros Fund Management's regulatory filing as of June showed that the fund sold Alphabet shares worth about $58 million and Amazon shares worth about $15 million.

Druckenmiller was one of the investors who cut their holdings in Nvidia. The document shows that his Duquesne Family Office sold more than 1.5 million shares of Nvidia.

At the same time, billionaire hedge fund manager David Tepper's Appaloosa Management cut its stakes in Amazon, Microsoft and Meta. Wildcat Capital Management, founded by David Bondman of TPG Capital and Newbridge Capital, cleared its holdings in Meta and sold $24 million worth of stock. Iconiq Capital, a well-known investment company that manages Zuckerberg's funds, sold $2.5 million worth of Apple shares. Kemnay Advisory Services, the family office that manages billionaire Allen Parker's tax-free shop wealth, reduced its holdings in Nvidia, Apple, Microsoft, Meta, Alphabet, and Amazon.

Buffett has significantly increased his shareholding in cash, waiting for a market downturn.

Berkshire Hathaway, Buffett's company, raised its cash levels to a record $189 billion in the second quarter of this year, which seems to be a defensive move as the fund prepares for a larger market correction. Of course, this will also provide Berkshire Hathaway with an opportunity to reinvest in the market at more reasonable valuations.

The last time Berkshire Hathaway held a record amount of cash was before the 2022 bear market correction. Buffett usually increases his cash holdings for three reasons, but currently two stand out: one is to keep cash on hand to take advantage of opportunities in the market, and the other is to increase cash to protect the fund from downturns in the market.

But things are more complicated than that, and Buffett may be waiting for a market downturn.

Historically,$S&P 500 Index (.SPX.US)$about every 18 months, the market experiences a correction of more than 20%. These healthy corrections provide an opportunity for the market valuation to reset from an overvalued state, which is also the reason why investors buy stocks again.

Buffett also openly expressed his view that the market is overvalued, making it a wise move to hold cash until opportunities arise. Buffett is telling us that the market needs a reality check.

Editor/ping