As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing

After what looked like the start of a recovery in March, the S&P 500 fell a further 3.4% last week. As of 2 April 2025, America’s most widely followed stock market index is down 4% year to date and 511 points from its all-time high set in mid-February.

As the Trump administration’s tariff policies continue to rock markets, investors are shifting capital into cash and safe-haven assets. This is putting pressure on US stocks, with big names like Tesla and Moderna down over 30% this year.

One of the world’s most famous investors appears to have pre-empted this occurrence. Warren Buffett’s investment firm, Berkshire Hathaway, has been stockpiling cash for several months now.

While the ‘Oracle of Omaha’ hasn’t specified the reasons behind the move, it certainly appears to have been a good one.

Now with over $330bn in cash on its balance sheet, it’s well-positioned to benefit from low prices before a rebound.

What can investors learn from this strategy?

Words of wisdom

Buffett is known for his many wise words when it comes to finance. Quotes of his are used liberally by writers and lecturers and have become canon in the world of investing.

Recent events seem to mimic one of his most famous lines: “Be fearful when others are greedy and greedy when others are fearful“.

After Covid, the S&P 500 bounced back spectacularly, climbing almost 90%. When it dipped again in 2022, he went on a $34bn shopping spree. In the following two years, it gained over 55%. But as people got greedy last year, Buffett started selling.

Many analysts expect the S&P 500 to fall further this year before bouncing back. So there could be a lot of opportunities in the coming months for value investors to consider low-cost shares.

But which ones?

Top US tech firms are among the hardest hit by tariffs, yet the vast majority of them still hold significant value. This means the sector could enjoy a notable rebound later this year once tariff costs are priced in.

For UK investors, an investment fund like Scottish Mortgage (LSE: SMT) provides broad exposure to this industry. It’s one of the UK’s most well-known and widely held investment trusts.

Its portfolio includes top tech stocks like Spotify, Meta, and Nvidia along with a diverse mix of e-commerce, healthcare, and decarbonisation stocks. 

The trust has an ongoing charge of 0.34%, which is lower than most similar trusts.

For the past three years, it’s traded at a discount to net asset value (NAV), meaning the stock is cheaper than the combined value of its assets. It’s currently at 9.29%, so investors can gain exposure to the same assets for almost 10% less than buying them each individually.

On the flip side, this discount suggests investors aren’t 100% confident in the fund’s management and aren’t prepared to pay full price. Unless this changes, potential gains may be less than those of the individual stocks once it rebounds.

Be that as it may, it’s still a potentially attractive opportunity for investors to consider, in my opinion. And it’s not the only one. The UK stock market hosts a wealth of US-focused funds that provide exposure to companies with promising growth prospects. Other examples include Polar Capital Technology Trust and Baillie Gifford US Growth Trust.

The post As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing appeared first on The Motley Fool UK.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Mark Hartley has positions in Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended Meta Platforms, Moderna, Nvidia, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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