Dow Futures Rocket but Warren Buffett’s $128 Billion Skips Overpriced Market

  • Dow Jones Industrial Average (DJIA) futures rocket 117 points on Monday thanks to US-China trade optimism.
  • But billionaire Warren Buffett remains cautious of market prices, pulling out of an acquisition deal after being outbid.
  • Berkshire Hathaway still sits on a record $128 billion cash pile, reluctant to enter a frothy market.

Dow Jones Industrial Average (DJIA) futures point to another strong week on the stock market, up 117 points at 5.51 am Monday.

While traders remained focused on short-term US-China trade talks, Warren Buffett is still cautious about the market’s “sky-high” prices. The Oracle of Omaha is sitting on $128 billion in cash and is being forced to look beyond the stock market for value investments.

Worse, Buffett’s preferred indicator of market bubbles – the “Buffett indicator” – is at highs not seen since the dot-com crisis. And last week he was uncharacteristically cautious in bidding for startup company Tech Data.

Reading between the lines, Warren Buffett is reluctant to deploy capital in this record-high market.

Dow futures soar 100 points higher

Dow futures chart Monday
Dow Jones Industrial Average (DJIA) futures jumped on Monday, but is the market overvalued? Source: Yahoo Finance

Dow futures contracts were 117 points higher on Monday as China’s latest “countermeasure” in the trade war wasn’t nearly as destructive as thought. Traders feared a sharp response from China after Trump signed a bill that supported Hong Kong protestors last week. But the retaliation (sanctions on NGOs and restrictions on warships) should have little impact on negotiations.

S&P 500 futures and Nasdaq futures were 0.36% and 0.31% higher respectively. Bitcoin traded at $7,290.

Warren Buffett forced to look beyond the stock market

Most of Berkshire Hathaway’s biggest investments of the last few years came from blue chip stocks like Apple, Delta, and recently Amazon and JP Morgan Chase. But with the stock market at record highs, Buffett has been scouring the private equity…

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