It’s a strange time to be investing. Inflation is a major problem, interest rates are still high and there are concerns that we will not see a smooth economic landing and could even enter a recession. Furthermore, the S&P 500 is up nearly 25% over the past year and is hovering near record highs.
While this doesn’t mean we have to follow the every move of the super-rich, given the complicated investment landscape we find ourselves in, it can be useful to look at what the super-rich are planning to do with their portfolios. Here’s a look at what some top billionaires are selling and buying right now.
A wave of sales unfolds
If you take a quick look around the internet, you’ll notice that there’s quite a bit of selling going on, and surprisingly a large portion of it consists of CEOs selling shares of their own companies.
Among its leaders is Jeff Bezos, the former CEO and founder of Amazon. In February, he cashed out 50 million shares, for a total of no less than $8 billion. It was the first time he sold shares since 2023.
Then there’s Mark Zuckerberg, its CEO Metaplatforms. By the end of 2023, he parted with 1.8 million shares, leaving him with almost $500 million in his pocket. It was his first sales round in more than two years.
Next up is Jamie Dimon, CEO of the banking giant JPMorgan Chase. In late February, he sold about $150 million worth of stock. Although not a relatively large amount, it was surprising because it was the first time he sold shares during his tenure as CEO.
The Walton family, owners of Walmart, also joined the selling wave. During a two-week period in February, Walton Family Holding Trust raked in $1.5 billion after selling 8.8 million shares.
And let’s not forget Warren Buffett, CEO of Berkshire Hathaway and legendary investor. He and his company made headlines by releasing 115 million Apple (NASDAQ: AAPL) shares, totaling about $40 billion. Although he was not Apple’s CEO, Buffett’s substantial stake in the company made this move quite unexpected.
Collectively, these companies are among the most prominent and high-profile in the world. So when their CEOs start selling shares, it naturally raises questions. While some sales are part of planned divestitures, external factors may provide a more comprehensive explanation for this trend.
Essentially, the stock market posted remarkable gains in early 2024. That in itself could be enough to realize some gains. But combined with an election year in the US, escalating tensions in the Middle East and the prospect of prolonged higher interest rates, CEOs may see this as a time to seek safer investment options.
What do they buy?
While sales at this level are not unprecedented, the seemingly short timeline in just a few months is notable. Furthermore, it begs the question: what investments are these CEOs turning to in light of their divestitures?
If the primary purpose behind this sell-off is to seek refuge from global uncertainties, it logically follows that funds will be diverted to sectors known for their resilience during economic instability and changing political climates.
We can see evidence of this in Buffett’s recent activities. While he sold Apple, he doubled down on the oil giant Chevron (NYSE:CVX). The 4.4% dividend is certainly attractive, but the purchase comes as part of a broader realignment of Berkshire Hathaway’s portfolio to gain more exposure to energy and oil, two sectors known to be doing quite well amid uncertain economic prospects.
In a similar vein, famed hedge fund manager Ray Dalio appears to be following the Oracle of Omaha’s strategy of finding defensive positions. In the past quarter, Dalio’s Bridgewater Associates increased its stake in Altria Group (NYSE:MO), one of the largest tobacco companies in the world. Although tobacco generally does not perform well in bull markets, when worst-case scenarios occur, tobacco tends to weather the storm quite well because consumers continue to buy its products regardless of economic conditions. Additionally, Altria currently offers a generous 9% dividend.
These moves highlight a growing trend of hedge funds seeking safe havens. Dates of Goldman Sachs shows that hedge fund buying pace in historically defensive sectors such as healthcare, utilities and consumer staples was at the highest level in more than eight months.
Defensive sectors are known for their steadfastness and resilience in volatile conditions and may see more buying from billionaires and hedge funds in the coming months as the geopolitical landscape shifts and a higher interest rate environment limits growth opportunities.
What it means for you
Tracking the investment activities of billionaires and hedge funds can provide valuable insights, but that doesn’t mean that copying their moves will lead to success for regular investors like you and me. They have enormous resources at their disposal – and often different goals than the average individual investor – that can influence their stock movements.
What can we learn from their recent actions? It looks like there are bumpy roads ahead in the market. But that doesn’t mean we should stop investing. Studies have shown that what’s more important than trying to time the market is simply maintaining it over time. Stay consistent when investing in companies you believe in for the long term, and your future self will thank you.
Should You Invest $1,000 in Chevron Now?
Consider the following before buying Chevron stock:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Chevron wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $550,688!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns May 6, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. RJ Fulton has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Amazon, Apple, Berkshire Hathaway, Chevron, Goldman Sachs Group, JPMorgan Chase, Meta Platforms and Walmart. The Motley Fool has a disclosure policy.
Billionaires Are Selling These Stocks and Buying These Instead was originally published by The Motley Fool
