Barrons,

" Buffett Isn’t Buying the Stock Rally. Why Trump, Russia, Fed Could Be Key.
Why is Warren Buffett so reluctant to part with his cash? The Oracle of Omaha’s skepticism toward the bull market is becoming more marked but that doesn’t mean a plunge is imminent.

Buffett’s Berkshire Hathaway was a net seller of about $6 billion worth of stocks in the fourth quarter, according to a regulatory filing. That likely added to the company’s record cash pile of $310 billion, as of the end of September. Apart from the occasional bargain—such as unloved beer producer Constellation Brands—Buffett doesn’t seem to have a thirst for many companies.

With the S&P 500 hovering near record highs, that’s understandable for a contrarian investor. But there are signs of nervousness elsewhere.

Bearishness among individual investors—as measured by the percentage who expect stock prices to fall over the next six months—reached 47.3% for the week ended Feb. 12, according to the American Association of Individual Investors. That’s the highest level since November 2023. Meantime, U.S. equity funds and ETFs experienced their first back-to-back weekly outflows in 10 months last week.

So is capitulation in the cards? Not yet.

The rally is supported by expectations of interest-rate cuts and those should still come through. Federal Reserve Governor Christopher Waller reiterated that on Tuesday, saying the Fed shouldn’t be put off course by the threat of the Trump administration’s inflationary tariffs policy. The market will look for further reassurance from the Federal Open Market Committee meeting minutes on Wednesday.

Trump’s drive for a quick peace settlement between Russia and Ukraine also has the potential to boost stock markets. U.S. talks with Russian representatives in Saudi Arabia on Tuesday have already lifted defense stocks as European governments reckon with higher military spending.

Buffett might be determined to wait for more of a discount in equities before being tempted to splash the cash but it could be some time in coming.

—Adam Clark"