Good morning! It’s Friday, and today we’re covering the Oracle of Omaha’s record winning streak against the lagging S&P 500. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

Buffett stands alone

Even at 94 years old, Warren Buffett is still beating the market with room to spare.

Berkshire Hathaway notched its ninth record close of the year on Thursday while the S&P 500 finished negative. It marked the stock’s seventh consecutive positive trading session, bringing 2025 gain to 17.21 percent.

Meanwhile, the S&P 500 is down 3.5% year-to-date. 

Over the last year, Berkshire is up more than 27% and the index is up 8.63%. 

As it turns out, among the ten largest companies in the broad index, Berkshire Hathaway is the only one that hasn’t seen a pullback of at least 10% from a 52-week closing high, according to Bespoke data.

Investors have treated Berkshire like a port in a storm of uncertainty from trade policy, market chop and a downturn among Magnificent Seven names.

But Buffett & Co. haven’t steered through the new year unscathed by accident. At the end of 2024, Berkshire held a record $334 billion in cash and cash equivalents.

As if looking around a corner, Buffett spent most of last year trimming the firm’s equity portfolio. In what amounted to a $134 billion selling spree, Berkshire slashed stakes in Apple, Bank of America and other positions, while refraining from any splashy acquisitions.

But how surprised can we be?

The Oracle of Omaha did what he’s always done: He avoided paying high prices in an overheated market.

Not long ago, some prominent investors mocked Buffett’s choice to hold so much cash as stocks soared. Now, the market is rewarding his discipline.

History suggests Berkshire won’t deploy its cash anytime soon.

Valuations are still stretched, and the so-called Buffett Indicator — total stock market value divided by GDP — sits more than two standard deviations above the historical trend line, which suggests froth.

For decades, Buffett has preached patience as an investor’s most powerful asset. When he finally makes his move into this wobbly market, many on Wall Street will wish they had the cash to follow his lead.

Market snapshot:

Elsewhere:

📊 Americans are heavily allocated into stocks. US households now own around 60% of US equities, according to JPMorgan. This record level of ownership creates a lockstep movement between price-earnings ratio of the S&P 500 and retail flows into the market. (CNBC)

✂️ Wall Street is slashing thousands of jobs. In recent weeks, layoffs have unfolded across Goldman Sachs, Bank of America, and Morgan Stanley. This time of year often brings cuts at top banks, though this time they arrive on the eve of what many in finance expect to be a boom-time for deals and IPOs. (Yahoo Finance)

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🏘️ Home sales unexpectedly jumped. Last month, sales of existing homes rose 4.2%, pointing to an increase in shopping activity and in the number of homes for sale to start the year. (WSJ)

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Rapid-fire:

• Nike stock ticked higher after hours following earnings that beat expectations but included weaker sales in China (CNBC)

• US households’ ability to come up with $2,000 for an emergency expense is at the lowest level since 2015 (Apollo)

• FedEx stock dipped after it lowered its full-year results forecast (Reuters)

• Apple is reportedly losing $1 billion a year on its streaming service (Yahoo Finance)

• President Trump signed an executive order to dismantle the Department of Education (US News)

• Several popular leveraged ETFs have erased most of their value to start 2025 (WSJ)

• Jerome Powell sees a stagflationary outlook in 2025 for the US, but President Trump will get the final call on markets (Opening Bell Daily)

• The Bank of England followed the Fed with a pause on rate changes (Barron’s)

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply directly to this email, ping me on X @philrosenn, or write me [email protected].