Warren Buffet Sends Serious Warning To Wall Street | The Economic Ninja

Warren Buffett has been sending warnings shots across the bow to Wall Street for quite some time, but just recently his warning has been getting even louder, and that is an impending stock market crash. How do we know this? Because Warren Buffett is sitting on the largest cash hoard his company, Berkshire Hathaway, has ever sat on. I have not only watched him do it this time, but I watched him do it in 2005-2006. And then, as everything came crashing down, he started scooping up the first, the low-hanging fruit in an economic crash, and that is transportation stocks.

It’s very serious that people watch these warnings and watch what wealthy people are doing. And I will explain in a second how people like Warren Buffett and Berkshire Hathaway must sell their stock a specific way, or it will cause panic, and will cause their holdings to go down even more. And that’s why most people can’t understand why or how the rich do things, because they don’t think like they think. They’re in a completely different situation. However, if you will take the time to contemplate what they’re doing, understand it, then it will cause you to do something even bigger.

This story is out of Yahoo Finance and started with The Motley Fool. And before I jump into it, if you don’t mind, the algo is messing with me a little bit. Right after I get over 471,000, like, you know, plus 25, it knocks me down 50. It’s done it four times. It’s one of those little barriers that there’s a lot going on behind the scenes. If you wouldn’t mind hitting subscribe, if you’ve been thinking about it, that would be awesome. I mean, if not, no worries. I’m just glad you’re here. The story is entitled, Warren Buffett has sold almost $2.3 billion of Bank of America stock, and it’s a direct reminder of his $56 billion warning to Wall Street.

It says for almost six decades, Berkshire Hathaway CEO Warren Buffett has been putting on a clinic for Wall Street, despite being just as fallible as any other investor, the Oracle from Omaha. Has overseen a greater than 55,260,000% return in Berkshire’s Class A since taking the reins in the mid 1960s. Returns of this magnitude are why 40,000 people flock to Omaha, Nebraska each year to hear Buffett speak. It’s also why investors pay very close attention to Berkshire’s quarterly filings, which detail which stocks were purchased and sold in the last quarter. But investors don’t always have to wait a full three months to discover that Buffett and his top investing aides, Todd Combs and Ted Wiltschner, have what they’ve been up to.

Says right here that the Oracle of Omaha has dumped almost $2.3 billion worth of B of A stock in the last two weeks alone. Now, when you find out in a second what percentage of this B of A holdings that is, you’re going to say that’s not that much. But I’m going to explain why it is a lot and how people like this have to do this. I do know this from real life. I have this experience in this. In instances where Berkshire holds a greater than 10% stake in the company, Buffett and his team are required to file a form for with the Securities and Exchange Commission every time shares are purchased or sold over the six trading sessions.

Berkshire Hathaway’s brightest investment minds have been able to press and sell the number two holding Bank of America fast enough. Now, let me let me break away real quick from that and tell you that investors in stocks that I know personally and then I’ve had that work around myself when we decide and I have never taken a 10% or greater position in a company that’s publicly traded. Just you know, the reason why is because when that happens, I have to file lots of documents. It becomes a big deal and unless I am willing to absolutely put everything on the line for that company, I’m not going to make them a decision.

I would keep mine at eight between nine and eight and a half percent. Okay. Very wealthy investors know how this works and I know a handful that it’s a big deal. They go, okay, I’m jumping. I’m jumping in. I’m making the 10% jump because now essentially what I’m doing and I’m not talking about me. I’m talking about these famous investors. Some of which I’ve met and spoke to about this specific topic. That means they’re now putting their faith and confidence in that company and it will cause investors to swoon into that investment. I’m trying to keep this really basic.

Type one if you understand this. Type two if you don’t. Because when well-known investors like Warren Buffett jump into a stock and they go over 10% and they start filing these documents and people know how big of a deal it is. It’s like people just follow what he’s doing. Alright, so it’s a big deal. It’s a big decision and it exposes you to a lot more paperwork and scrutiny of what you’re doing, why you’re selling it, and all that stuff. Okay. So it says here, form four filing show that almost 34 million shares of Bank of America were sold from July 17th to July 19th.

Last Thursday, a separate form four filing showed that almost 19 million shares were sold from July 22nd to July 24th. So this comes up to about 2.3 billion dollars in B of A stocks. So we’ve been talking about the banks and how they’re in trouble. Yet, share prices keep going up, right? We’re seeing a blow off top due to inflation, people chasing yields, a handful of reasons. And when an investor like Buffett or Berkshire Hathaway needs to sell this kind of stock, they need a liquid market. So they want days where things are strong. They know that they could start to sell.

They do not put one order in for that much. It spooks the market. Okay. So what happens is they want to sell little by little into and just so you know, these brokerages are charging like one to one and a half percent of the total value of this stock transaction to the company, right? Now, I’m not talking about Berkshire specifically, but large investors pay a lot of money for stock brokers to slowly push out little sales. And then they figure out at the end of the day how much they sold and what the percentage of commission is going to be.

But they sell into strength to not spook the markets and they do little by little. And then what happens is through these filings, because he is a greater than 10% owner, people find out sooner than when they would during a quarterly meeting with Berkshire Hathaway. Okay, when they expose their current holdings, what they bought and what they’ve sold. So it says there are a number of reasons to explain why Buffett and his team have trimmed the neighborhood of 5% of their company’s second largest holding. One possibility is simply a B of A isn’t the screaming bargain it once was after trading below its book value for much the last 15 years, which is a 25 to 30% premium to book value might have represented an attractive profit taking point.

Berkshire’s smallest minds may also be anticipating a shift, smallest I said, smartest, sorry, smartest minds may be anticipating a shift in the Federal Reserve’s monetary policy. No money center bank is more sensitive to changes in interest rates than Bank of America, while it disproportionately benefited from the most aggressive rate hiking cycle in four decades, which kicked off in March of 2022. Its net income is likely to be hurt more than its peers when the national the nation’s central bank begins easing rates. Well, there’s a lot more to it than just that, because a lot of people would think very simplistically, hey, when interest rates drop banks are gonna be making less.

That’s actually not true. Because if you think about it, when interest rates go up, and type three, if you understand this, when interest rates go up, less people borrow, okay, over time, the higher rates get and the longer they stay higher, less people borrow. When rates drop, and lending is really free flowing, there are more people borrowing more money, there’s more volume of loans happening. So that’s actually the banks always make a specific margin over the amount of the money it costs for them to borrow to lend it to you. So when that happens, everything just starts exploding for the banks, and they’re excited.

But another thing is the Federal Reserve only, they’ve only done it four times, or they’ve lowered rates, where before things are really, really bad, and they do it superficially. And it’s usually before an election, okay, it’s to prove something. They’ve only done it four times since 1972. Any other time than that, when the Federal Reserve lowers rates, and they really start lowering, like, hey, we’re lowering 25 basis points, 50 basis points, 25, you know, we’re calling emergency meetings. That’s a really good sign that we are really in it. And this is, we’re getting close to the time you want to start buying up real estate.

What happens is, everything’s going to crap in a hand basket, unemployment is spiking, real estate is falling, equities are falling, and they’re trying their hardest to spur growth. But by and large, most people aren’t borrowing because they’re afraid of catching a falling knife, you know, economically, financially, or they just simply can’t qualify for the loan because they missed a credit card payment because they got laid off from their job, okay. And that’s what’s going on right now. That’s what Warren Buffett is seeing. That’s why he’s sitting on the largest cash ward. This isn’t a story about just Bank of America.

It’s a story about the economy. And he is about to start deploying that cash when things get nutty. Right now, he’s sitting in bonds and cash, and he’s being smart. Most of America isn’t that bright. Now, I’m not talking about you, because if you’re watching this channel with some weird dude with a bro hoc and a dream, then you’re not normal. And that’s a good thing. You don’t want to be the norm. The norm are the sheep that fall off the cliff during an economic crisis, because they didn’t see it, or they mocked people like you that were out warning them.

Type five, you’ve been trying to warn people, but it’s like they just, no one’s home, man. The lights are on, eyes are open, but there ain’t anybody living in there. There’s just no common sense, right? Because in this day and age, common sense ain’t so common, right? And look at all the people trying to warn people, like all the fives. So you are already set apart, no matter how wealthy you are now, or are not wealthy. You know, I started with nothing. I didn’t have anyone to help me. Nothing. I started selling things from garage sales to buy my first house.

And I made it, which means every single one of you can make it and go crush it. And that’s the only reason I’m here, is to inspire you, to teach you, and so that you’ll go out. All I want is the coolest friends in the world. And the coolest friends, in my opinion, don’t just sit around drinking beer, talking about sports. They sit around maybe drinking beer, and they’re talking about what they just did and how they crushed it. And we’re asking each other questions. We’re like, well, if you’re crushing it, how do I crush it? Okay, and now I crush it over here, and I want you to go crush it over there.

That’s real friendships. That’s real exciting relationships. That’s what I want for all of you. So I got to find the coolest friends in the world. That’s what I’m doing. Tomorrow, I’m going to Chicago, and I’m not going to have a meetup. And I wish I could tell you where I’m going to be, but I’m going to go get next to that chrome bean, I think. And I’m just going to sit there with a cardboard sign, and I’m going to ask people to ask me anything they want about money, finance, and the economy, even though I can’t give them advice.

But we’re going to see what happens. I’ve never done anything like this. I’m going to meet a couple of business professionals to help me with my newest venture. And I’m super excited, but I just want to get on the street and ask people questions. You know, I’ve never done that kind of stuff and have people ask me questions. So see how that goes. Hey, again, the algo is messing with me. It’s 471,000. It jumps up to 25 plus and then smacks down 75 people immediately. This is an algo thing. If you’ve been on the sidelines or you’ve been unsubscribed and you could click subscribe, I’d be stoked.

Let’s shove the algo in the nose. Just pop them one. Hope you got something out of this. Warren Buffett’s getting ready for an economic crash. It’s obvious. And he’s not going to come right out and say it because he will help exacerbate that crash. I hope you’re doing something now because you’re going to be stoked when this thing happens. I ain’t going to sit around. I ain’t a victim. Are you a victim? Say yes or no down below. I am not a victim. And I’m going to take full advantage of this economic downturn. The Economic Ninja is out.

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