Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

Date: May 7, 2025

At Berkshire Hathaway’s 2025 shareholder meeting, Warren Buffett made headlines not for what he bought, but for what he didn’t. With Berkshire’s cash and U.S. Treasury holdings now totalling a record $347.7 billion[1], Buffett has sent a stark message to markets: valuations are high, risks are rising, and patience is power.

For halal-conscious investors, especially those new to navigating ethical investment choices, Buffett’s strategic restraint offers an instructive moment.

To help contextualize Buffett’s positioning, this article covers:

1. Buffett’s approach over the past two years
   
2. His warning about defensive sectors
   
3. The implications of his large cash holdings
   
4. What halal investors can learn from his strategy
   
5. Global market signals
   
6. What might come next
   

A Decade of Discipline: Buffett Sells While Markets Surge

Over the last 30 months, Buffett has quietly but consistently trimmed Berkshire’s equity holdings. From Q4 2022 through Q1 2025, the company has sold $174.4 billion more in stocks than it has purchased[2]. This includes cutting positions in major holdings like Apple and Bank of America. In Q1 2025 alone, Berkshire was a net seller by $1.5 billion, despite a correction in the S&P 500.

Berkshire’s 10-quarter Net Stock Sales and Cash Buildup

S&P 500 Return 12 Months after Entering Correction Territory

Why the caution? Buffett has long measured market froth using tools like the Shiller P/E ratio and his own “Buffett Indicator” (market cap-to-GDP). As of early May, the Shiller P/E stood above 33 – well above its long-term average of ~17 – even after a volatile correction in April[3]. For Buffett, that’s a flashing red signal.

Shiller P/E Chart

The Utility Wake-Up Call: When Safe Isn’t Safe

At the shareholder meeting, Buffett warned investors not to blindly trust traditionally “defensive” sectors. Citing the impact of wildfires on electric utilities, he said, “The public utility business is not as good a business as it was a couple of years ago”[4]. Berkshire Hathaway Energy, a once-stable profit engine, took a hit with its underwriting earnings nearly halved, in part due to $860 million in after-tax losses tied to California wildfires[1].

For Muslim investors who prioritize stability, this message is critical. Even sectors perceived as low-risk can carry unseen vulnerabilities. For example, real estate investment trusts (REITs), often considered stable income generators, faced sharp declines during the COVID-19 pandemic as commercial property values and rental income plummeted. This highlights how systemic shocks can undermine even seemingly defensive sectors.

Markets Are Moving – Buffett Isn’t

Despite a brief correction in March, the S&P 500 rebounded quickly. Historically, markets have posted an average 12-month return of 18% after such pullbacks since 2010[5]. But Buffett isn’t rushing in.

Instead, he’s sitting tight with dry powder. At nearly $348 billion, Berkshire’s liquidity provides optionality for future downturns, especially as it declined to repurchase its own shares for the third consecutive quarter – an indication that Buffett views the stock as too richly valued[1].

Buffett famously did just this in 2011. At the height of the post-financial crisis uncertainty, he invested $5 billion in Bank of America by purchasing preferred shares with a 6% annual dividend and negotiated warrants to buy 700 million shares of common stock at $7.14. When Berkshire exercised those warrants in 2017, it gained an immediate $12 billion windfall[6].

For halal investors who can’t park money in interest-bearing Treasuries, the principle still stands: reserve capital during frothy times, and act decisively during dislocation.

What Halal Investors Can Take Away

1. Valuation Matters
   

Just as Buffett refuses to overpay, halal investors may benefit from assessing whether screened halal stocks are priced appropriately. Musaffa’s stock screening tool can help investors find undervalued, Shariah-compliant opportunities.

2. Cash = Optionality

While conventional investors may hold Treasuries, halal portfolios might lean toward sukuk, cash-equivalent Islamic instruments, or even physical gold to maintain liquidity.

3. Avoid Herd Mentality

Buffett’s contrarian stance reminds investors to resist market euphoria.

4. Be Patient, But Be Ready

Opportunities often arise in downturns. Having the tools, strategy, and liquidity in place means halal investors can move confidently when markets misprice quality assets.

A Global Perspective: Not Just a U.S. Story

While Buffett’s actions center on the U.S., global markets are also shifting. Asian investors are unwinding dollar holdings, potentially triggering a $2.5 trillion exodus from U.S. assets[7]. Meanwhile, China has slashed rates and reserve ratios to combat growth risks from tariffs[8]. Citigroup has urged investors to “stay in U.S. markets but avoid new risk”[9].

For Muslim investors around the world, the implication is clear: diversification across halal geographies and asset classes is essential. For example, investors might consider sukuk in the GCC, which offer fixed-income alternatives aligned with Shariah principles. Gold often serves as a hedge during inflation or volatility, while REITs with strong compliance scores in Europe provide exposure to property markets. These options can help build resilience into diversified halal portfolios.

Looking Ahead: What If Markets Drop Further?

If history is a guide, more volatility may lie ahead. Market valuations remain stretched, inflation pressures linger, and central banks are holding firm on rates. But for long-term investors, it’s a time to prepare.

Buffett’s strategy is not about fear. It’s about readiness.

“The stock market is a device for transferring money from the impatient to the patient.”

Muslim investors may find resonance in that wisdom.

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