Buffett's Alphabet Gamble: Berkshire CEO Still Calling the Shots
Warren Buffett remains in control of Berkshire Hathaway's major stock investment decisions, despite officially handing over the CEO role to Greg Abel last December. A recent $10 billion purchase of Alphabet shares by Berkshire is a case in point, with Buffett reportedly initiating the deal.
The Alphabet stake grew by roughly $17 billion in Q2, pushing the stock into third place in Berkshire's portfolio, narrowly ahead of Coca-Cola. As of June 30, Alphabet held a market value of $37.77 billion, while Coca-Cola's was $32.51 billion.
Buffett issued a broader warning about the stock market in May, stating that investors are in a 'gambling mood' and valuations look 'very silly'. This warning is being backed up by data, with the S&P 500's CAPE ratio hitting 40.6 in July - the highest reading since the dot-com crash.
Historically, a CAPE reading above 40 has not ended well for investors, with average three-year returns coming out negative 30%.