Elon Musk Says Warren Buffett Is ‘Clearly Expecting A Correction’ After Berkshire Sold Nearly Half Of Its Apple Stock

Tesla Inc. (NASDAQ:TSLA) and SpaceX CEO Elon Musk has commented on Warren Buffett-led Berkshire Hathaway, Inc.‘s (NYSE:BRK) (NYSE:BRK) decision to sell about half its stake in Apple Inc. (NASDAQ:AAPL).

What Happened: Over the weekend, a user on X, formerly Twitter, shared the news of Berkshire accumulating a cash reserve of almost $277 billion on the platform.

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The user humorously suggested that Buffett could make daring, all-in investments with this cash reserve, and acquire any of these companies: Netflix, Salesforce, Toyota, Adobe, and Hermes.

In response to the user, Musk said, “He [Buffett] is clearly expecting a correction of some kind or otherwise simply cannot see better investments than Treasury bills.”

The tech mogul also criticized the Federal Reserve for not lowering interest rates, suggesting that the current rates are too high.

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“The Fed needs to drop rates. They have been foolish not to have done so already,” he stated.

He is clearly expecting a correction of some kind or otherwise simply cannot see better investments than Treasury bills.

The Fed needs to drop rates. They have been foolish not to have done so already.

— Elon Musk (@elonmusk) August 4, 2024

Why It Matters: Circuit breakers were triggered for Japan’s TOPIX index, halting trading as the index dropped over 6%, leading to urgent stabilization measures on Sunday night.

The broader Asia-Pacific region saw declines, with the MSCI AC Asia Pacific Index falling 2%, Japan’s Nikkei 225 plummeting 5.60%, and South Korea’s KOSPI index dropping 4%.

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This continued a trend from Friday, when Japan’s Nikkei 225 and TOPIX both fell over 5% and 6%, respectively. In the U.S., markets faced significant losses on Friday due to a weaker-than-expected July jobs report, with the Nasdaq dropping over 10%, and the S&P 500 and Dow decreasing by 5.7% and 3.9%, respectively. At the time of writing, Dow Jones Industrial Average futures fell by 0.81%, while S&P 500 and Nasdaq-100 futures dipped 1.43% and 2.4%.

Notably, Berkshire Hathaway’s second-quarter net earnings fell year-over-year due to a decline in investment gains, despite an increase in operating earnings. The company continued to offload its stake in Apple during this period.

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In the second quarter, net earnings experienced a 15.50% decline year-over-year, dropping from $35.91 billion to $30.35 billion. On the other hand, operating earnings—reflecting income from the company’s portfolio entities—increased by 15.48%, reaching $11.60 billion.

Gains from the investment portfolio saw a significant decrease of 27.52%, falling to $18.75 billion.

Meanwhile, Berkshire’s swelling cash position has also led to speculation on social media about potential investments, with some Tesla fans hoping that Buffett would invest in the electric vehicle maker’s stock.

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