Recently, the 'Stock God' Buffett once again 'cleaned out' stocks, which has attracted high market attention. The latest quarterly report shows that Berkshire continues to reduce its stock holdings, with the company's cash reserves reaching a historical high of $325.2 billion, an increase of 17.4% from $276.9 billion at the end of the second quarter.

Under the circumstances of some rising and some falling, Berkshire's cash reserves have surpassed its stock holdings. When measured by the company's total assets, Berkshire's current cash position is about 28%, reaching its highest proportion in years, and this ratio has an "astonishing coincidence" with the trends of the us stock index.

Some investors feel anxious about Buffett hoarding a massive amount of cash, believing this indicates Buffett is "putting on the us stocks", but what signals might be hidden within this? What considerations might Buffett have regarding his portfolio adjustments?

Buffett's cash ratio vs the dow jones index trends, surprisingly showing an astonishing coincidence?

Comparing Buffett's cash position with the trends of the us stock index since 2000 reveals a certain degree of positive correlation, with the change in this cash ratio having the highest correlation with the dow jones index.

This shows Buffett's "reverse" operation towards the market - hoarding cash when the stock market rises and buying stocks when the market falls, seemingly confirming the investment guru's most well-known saying: "Be fearful when others are greedy, and be greedy when others are fearful."

As a legendary investor, Buffett significantly reduced his holdings in us stocks around 1969, 1987, 1999, and 2007. After each of these four reductions, the us stock market experienced severe declines. From November 2007 to March 2009, both the nasdaq and s&p 500 dropped over 50%. After that, Buffett successfully bottomed out in us stocks and first became the world's richest man in 2008.

In the years following, Berkshire's cash ratio has remained at a low level of about 16%, while the us stock market has continued to rise, allowing the stock guru to maintain an average annual return rate of over 20%, crossing bull and bear markets with remarkable achievements.

Currently, Buffett's cash ratio has reached a historical peak, which may indicate his concerns about market conditions. Previously, financial media Barchart pointed out that the so-called "Buffett Indicator" has recently reached a historical high of 200% for the first time, flashing a "warning" signal.

"Buffett Indicator," also known as the Buffett Indicator, was published by Buffett in 2001 in USA Fortune magazine. It calculates the ratio between the total market cap of US stocks and gross domestic product (GDP). Buffett stated that he uses this ratio to observe whether the market cap of US stocks is supported by the real economy. If the ratio is very low, it means stocks are undervalued; conversely, it indicates the market is overvalued.

What other considerations does Buffett have besides reducing his holdings in apple?

At the shareholder meeting in May this year, Buffett explained part of his reasons for selling apple stocks, stating that he anticipates higher tax rates in the future. Additionally, he expressed a desire to provide more flexibility for his successor after his departure, and holding enough cash is seen by outsiders as preparation for this.

However, there are still many analyses and suspicions about the reasons. Jim Shanahan, an analyst at investment firm Edward Jones, expressed doubt that part of the reason Buffett began selling apple stocks might be related to the death of vice chairman Charlie Munger last year, as the sell-off began shortly after his passing.

Some professionals analyze that "Buffett's sale of apple stocks is partly because he is not as familiar with technology companies as his partner Munger, but the main reason is that Buffett has always been a conservative investor."

Buffett is known for his "value investing" philosophy and firmly believes in the potential of long-term hold positions in high-quality stocks. Therefore, when market cap valuations are excessively high and investment opportunities are limited, Buffett withdraws substantial funds from the stock market to wait and see, seemingly biding his time to act when market volatility increases and stock prices are low.

At the same time, the persistently high yields on US government bonds have become the reason for the stock market sage to sell apple stocks heavily and buy US government bonds. Berkshire's short bond holdings reached a total of $288 billion in Q3, even surpassing the Federal Reserve. Over the past two years, US government bond yields have maintained around 5%, providing Buffett's massive funds with considerable returns. He himself stated that US government bonds will continue to be acceptable (providing good returns); currently, there are no better investment options in the market, "we only swing at the good stocks we like."

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