KUALA LUMPUR (Dec 12): Berkshire Hathaway’s sale of US$28.7 billion (RM134.23 billion) of stock in the first three quarters of 2023 is seen as sounding alarm bells for the American economy.

In a report on Monday, Newsweek said some economists interpreted the move by Warren Buffett's firm as raising questions over the US economy.

The American weekly news magazine said that judging from the company's earnings, the Nebraska-based firm of the legendary investor and billionaire, known as the Oracle of Omaha, sold a net US$10.4 billion of stock in the first quarter of the year.

In the second quarter, it sold close to US$13 billion of shares, and bought less than US$5 billion.

In the third quarter, it sold about US$5.3 billion worth of stocks, said the magazine.

It said that as Buffett is considered one of the greatest investors of all time, as well as one of America's richest men, his moves are closely observed and analysed.

Citing Steve H Hanke, a professor of applied economics at Johns Hopkins University who served on former US president Ronald Reagan's Council of Economic Advisers, Newsweek said "recent lightening up on stocks and accumulation of a pile of cash — US$157 billion — by Buffett and Berkshire Hathaway is consistent with the fact that stocks are relatively pricey right now.

"The money supply of the US, broadly measured, started contracting in July 2022, and has been falling like a stone," Hanke said. "Since last year, the US money supply has contracted by 3.3%."

According to Hanke, there have been only four periods in US history — in 1920-21, 1929-33, 1937-38 and 1948-49 — in which the money supply has had significant contractions.

"Each of those four episodes was followed by a serious recession," he said. "The current monetary contraction is clearly going to lead to precisely what monetary contractions always lead to — a recession."