Is Warren Buffett's Berkshire Hathaway Now the Ultimate Hedge Against the S&P 500 Index?

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Bram Berkowitz, The Motley Fool

Sat, Mar 22, 2025, 8:25 AM 4 min read

Stocks person gotten disconnected to a less-than-ideal commencement to the year. The benchmark S&P 500 is down astir 4% arsenic I constitute this and has fallen much than 8% since Feb. 19, arsenic concerns astir economical maturation and President Donald Trump's commercialized warfare person sent stocks connected the retreat.

However, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has done the opposite. The 2 classes of shares person roared implicit 16% higher truthful acold this year, hitting caller all-time peaks. After a cautious twelvemonth for Berkshire successful 2024, Buffett and his squad look similar they played the marketplace recently, and investors look to beryllium paying attention.

Is Berkshire Hathaway present the eventual hedge against the S&P 500?

The large happening astir Berkshire is that it's 1 of the largest conglomerates successful the world, truthful erstwhile you put successful it, you get a small spot of everything. It operates ample businesses successful the energy, railroad, mortgage, and security sectors. It besides oversees a astir $281 cardinal equities portfolio with stocks successful each sector, including Apple, Bank of America, Occidental Petroleum, and Coca-Cola.

In caller years, Berkshire has stockpiled currency similar ne'er before. At the extremity of 2024, it had amassed implicit $330 cardinal successful currency and short-term Treasury bills. The diverseness of its businesses, the spot of the stocks it holds, the unthinkable currency pile, and a beardown enactment squad person led investors to presumption the conglomerate arsenic a formation to safety.

Berkshire has present beaten the broader marketplace successful 3 of the past 4 years, arsenic volatility has raged. The banal has adjacent performed likewise to gold, which has been connected an unthinkable tally of its own.

There has been different awesome inclination successful its GEICO security business. In 2024, Berkshire reported security underwriting income of much than $9 cardinal and security concern income of implicit $13.6 billion, compared to astir $5.4 cardinal and astir $9.6 billion, respectively, successful 2023.

In his yearly missive to shareholders past month, Buffett credited Berkshire leaders similar Todd Combs and Ajit Jain for transforming its halfway concern implicit the past 5 years and making it the juggernaut it is today.

The security concern arsenic a full has travel nether scrutiny successful caller years owed to its trouble successful pricing definite events and earthy disasters similar wildfires. But Buffett wrote that determination has ne'er been much economical hazard than determination is today, which fuels the security concern and besides makes Berkshire's sheer size an vantage arsenic agelong arsenic its underwriting is done prudently:

No backstage insurer has the willingness to instrumentality connected the magnitude of hazard that Berkshire tin provide. At times, this vantage tin beryllium important. But we besides request to shrink erstwhile prices are inadequate. We indispensable ne'er constitute inadequately priced policies successful bid to enactment successful the game. That argumentation is firm suicide.