Warren Buffett is not a man who speaks in a vacuum. When he speaks, the world of finance listens. At 94, the legendary investor uses his annual letter to the shareholders to send a message without detour to Washington: budgetary drifts and monetary instability threaten the American economy. This alarm signal comes as Berkshire Hathaway records spectacular financial performance, with record profit and historic cash of $ 334.2 billion. Thus, in a market where investment opportunities are scarce, Buffett favors prudence and prepares to hand over to his designated successor, Greg Abel.
Buffett warns against the budget management of Washington
In his letter to shareholders, Buffett sends an unequivocal message to Washington. He criticizes growing budget deficits in the United States, exacerbated by the possible extension of tax cuts initiated under the Trump administration. “Tax madness can destroy the value of paper money,” he warns, and insists on the importance of prudent management of public finances. He recalls that the prosperity of the United States is based on a stable dollar and that monetary errors can have irreversible consequences.
While budgetary deficits explode and the debate on the extension of tax cuts in the Trump era rages, Buffett fears a weakening of the dollar. He exhort Washington to preserve a stable economic framework, and to make sure to support the most vulnerable populations: “Take care of those who, without fault on their part, draw bad cards in life. They deserve better ”.
An unprecedented financial performance for Berkshire Hathaway
Berkshire Hathaway continues to impose his domination in the markets. The year 2024 ends with a net profit of $ 89 billion, carried by strategic investments in Apple and American Express. The operating profit jumped 27 %, and reached $ 47.44 billion, a new summit for the Buffett Empire. In a context of high stock market valuations, the company accumulates a record cash of $ 334.2 billion, an unprecedented level. This accumulation reflects a cautious approach to a market deemed too expensive, where attractive investment opportunities are rare.
Despite these spectacular results, Buffett remains reserved for investment prospects. He notes a shortage of attractive opportunities, and stresses that “often, nothing seems convincing” and that the moments when he can massively deploy capital are increasingly rare. This caution has resulted in the partial sale of its participation in Apple, although the apple brand remains the biggest investment of Berkshire Hathaway. Such a strategy illustrates the methodical management of the conglomerate, which prefers to wait rather than overpaying overvalued assets.
As he talks about his advanced age, Buffett is preparing the transmission of Berkshire Hathaway to Greg Abel, his designated successor. He assures shareholders that the latter has “largely demonstrated his ability to allocate capital in a wise manner”, which thus guarantees a transition without hitch. In addition, Buffett confirms its intention to strengthen Berkshire's investments in Japan, especially in conglomerates such as Mitsubishi and Itochu, as it estimates that these companies offer more attractive valuation than American actions.
Warren Buffett reminds us of an essential rule of investment: prudence and responsible management are capital in times of uncertainty. Its warning on the public debt of the United States and the stability of the dollar may well materialize if the US budgetary drifts continue. In addition, his displacement to Japan and the preparation of his succession constitute a major step for Berkshire Hathaway, who will have to evolve without him in an increasingly volatile financial world.
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