Warren Buffet made an investment move that proved to be detrimental to the tune of $713 million. This seemingly hasty decision seemed like a great idea at the time, but proved to be a loss that surely stings now. Most people watch Warren Buffett with eagle-eyes to see what his stock predictions are. Known to hold firm and stay put on his S&P 500 stocks, Buffet made a bold and uncharacteristic move that wasn’t among his finest. Buffet’s advice has always been to hold S&P 500 stocks. However, due to the plunging market and the climate of the world which surrounded him in 2020, he went against the grain of his own investment advice. He decided to liquidate that which he felt would no longer prove to be profitable.
The only problem with that, is that according to Investors Business Daily, those very stocks saw a sharp increase merely a few months later.
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The stocks that by all accounts, Buffet should have held near and dear, were Berkshire Hathaway’s shares of the energy firm Occidental Petroleum, as well as industrial United Airlines. Both of these stocks plummeted to dangerous levels at the tail end of 2020. That was a clear indication to Buffet that the times were changing, and there may not be any hope of a rebound. Going against his normal pattern, he pulled out of the market.
Had he stayed, he would have benefitted, and not just by a small margin, either. Both of these stocks saw a sharp increase in 2021, proving Buffet’s usual theory as being the right path to follow. Unfortunately for Buffet, it was already too late.
According to Trade Ticker, both stocks “have powered higher in 2021’s value-driven market. Occidental is the S&P 500’s fourth-best stock this year, up 77%. And United is up more than 30%, putting it in the index’s top quintile.”
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Investor’s Business Daily indicates that; “in the value-stock led rally of 2021, where last year’s worst stocks are soaring, both these stocks are coming alive for investors looking at the right indicators now.”
This major flip-flop is not one that was easily predicted, so it is reasonable to understand the mode of Buffet’s thinking, however hindsight is 20/20 and surely he would have made a very different move in 2020 if he knew then what he knows now. Had he followed his own investment advice, he would not have lost out on this unique market flip.
Last year’s worst stocks are proving to be this year’s very best, and those who stuck through the sharp decline are counting their blessings. Unfortunately for Buffet, he was not among them.
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Sources: Investor’s Business Daily, Trade Ticker
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