Are Warren Buffett and Michael Burry preparing for a stock market crash? – Motley Fool UK

Warren Buffett has been holding off investing and Michael Burry has been selling stocks. Is this a sign that they’re getting ready for a stock market crash?
Image source: Getty Images
Warren Buffett and Michael Burry both filed 13F reports last night. These give investors like me an insight into what stocks the investors have been buying this year.
Both filings indicate a degree of caution in the stock market. Buffett’s investment activity slowed significantly in the second quarter and Burry sold almost everything from his US stock portfolio.
So are the investors expecting a stock market crash? And what does that mean that I should do with my investments right now?
Burry’s 13F filing was one of the most striking from the recent quarter. The CEO of Scion Asset Management sold almost all of his US stock positions.
Between April and June, Burry sold all his stock in no fewer than eleven US companies, including Alphabet, Meta Platforms, and Bristol-Myers Squibb. The only stock Burry bought was prison owner GEO Group.
Unlike Buffett, Burry has been vocal about his views on the stock market. The Scion CEO has tweeted his belief that the stock market rally won’t last.
Burry’s 13F indicates to me that he’s backing up his words with his actions. Selling his entire US portfolio down to one beaten-down real estate stock tells me that Burry is expecting a stock market crash.
Unlike Michael Burry, Warren Buffett did buy stocks in the last quarter. But it looks to me as though the Berkshire Hathaway CEO also has significant reservations about share prices.
With around $70bn available to invest, Buffett only used around $4bn on stock investments plus an additional $1bn on buybacks. This means that the Oracle of Omaha left substantial cash on the sidelines.
Furthermore, all of Buffett’s investments were in businesses that Berkshire already owned shares in, such as Apple, Chevron, and Occidental Petroleum. In other words, Buffett didn’t see any new opportunities worth investing in. 
This marks a substantial slowdown from the previous quarter, when Berkshire made 15 investments, including eight new ones. That’s in addition to agreeing a deal to buy Alleghany outright.
While Buffett doesn’t make stock market predictions, I think his hesitance in buying shares is important. It indicates to me that he thinks prices are high at the moment.
Michael Burry and Warren Buffett think about the stock market differently. Where Burry attempts to forecast share price movements, Buffett focuses on the underlying businesses.
Despite this, there seems to be a similar message coming from their 13F filings. And I think this is significant.
To me, it seems clear that both investors see stocks are expensive at the moment. Whether or not a stock market crash is on the way, I’m taking this seriously.
As a Warren Buffett follower, I’m not selling my stocks. But I am looking to be cautious in my investments and being extra careful to makes sure that I’m not overpaying.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Stephen Wright has positions in Alphabet (C shares), Berkshire Hathaway (B shares), and Meta Platforms, Inc. The Motley Fool UK has recommended Alphabet (A shares), Alphabet (C shares), and Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
| Hamish Cassidy
These two stocks are portfolio pinnacles of legendary investor Warren Buffett. Does this mean I should consider buying them for…
Read more »
| Owain Bennallack
Inflation was moribund in the West for two decades, with near-zero interest rates since the financial crisis their barely perkier…
Read more »
| Paul Summers
Lots of popular FTSE 100 (INDEXFTSE: UKX) shares look temptingly cheap today. But Paul Summers thinks quality matters most.
Read more »
| Harshil Patel
Dividend shares can be an excellent way to earn passive income. Our writer considers a plan to put extra cash…
Read more »
| Ben McPoland
UK inflation is predicted to soar as high as 22% by December. Should I worry this will trigger a stock…
Read more »
| Royston Wild
This expert suggests that investing in dividend stocks is a good idea. Here are two dividend-paying shares our writer’s considering…
Read more »
| Ian Benfield
I have invested in a stock market portfolio of FTSE 350 shares that I expect to continue outperforming these indices…
Read more »
| Christopher Ruane
Can our writer apply investment lessons from Warren Buffett to improve his own financial position? This is how he’d try.
Read more »
View All
Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >

We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FRN: 422737). In this capacity we are permitted to act as a credit-broker, not a lender, for consumer credit products. We may also publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners. We do not provide personal advice and we will not arrange any products on your behalf. Should you require personal advice, you should speak to an independent, qualified financial adviser.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.

source

Leave a Comment