"What Did He See?"... Warren Buffett Sells Stocks and Piles Up Cash

"AI Frenzy, Options and Leveraged ETF Markets Overheating"
Berkshire Maintains Net Stock Sales for 14 Consecutive Quarters

Warren Buffett, Chairman of the Board at Berkshire Hathaway, has warned that amid the artificial intelligence (AI) frenzy, speculative funds are flooding into ultra-short-term options and leveraged investments, making the market resemble gambling rather than speculation.

Warren Buffett. AP Yonhap News.

According to CNBC on the 15th (local time), Buffett said, "In a market where everyone prefers gambling, it becomes much more difficult to find good undervalued companies."

He explained, "There are times when incredibly good opportunities come all at once, but more often, it's a stroke of luck to find a single company worth investing in every few years. That kind of market is actually the norm." He added, "Humans inherently love gambling," and pointed out, "Far more money is poured into creating gamblers than into raising investors."

Expressing concern about the ultra-short-term investment craze, Buffett declared that so-called "zero-day (0DTE) options," which expire within a single day, are "gambling, not investing or even speculation."

Referring to a recent case involving a U.S. soldier accused of earning about 400,000 dollars in prediction markets using confidential information about Venezuelan military operations, he stated, "If you know when a specific event will happen, you could make money, but the sheer fact that this type of trading has grown to such a massive scale is astounding," adding, "The size and speed of these phenomena are unlike anything we've seen before."

He especially diagnosed that speculative trading—including options and leveraged ETFs—driven by the AI infrastructure investment boom is further overheating the market.

Buffett, who has recently invested in Alphabet, stated that he personally made the decision for this investment. Berkshire disclosed its first holding in Alphabet in the third quarter of last year and has steadily increased its stake since then. Last month, Berkshire made an additional purchase of Alphabet shares worth approximately 10 billion dollars through a third-party allocation.

However, the overall investment stance remains conservative. As of the end of the first quarter this year, Berkshire’s cash and short-term treasury holdings reached a record high of about 397 billion dollars (approximately 586 trillion won). In contrast, the company has continued to be a net seller of stocks for 14 consecutive quarters, maintaining a strategy of accumulating cash rather than making aggressive investments.

On his investment principles, Buffett said, "There is no better rule than the 'Golden Rule' of treating others as you wish to be treated," emphasizing, "This principle costs nothing, but in the end, it brings the greatest benefit to yourself."

This content was produced with the assistance of AI translation services.