There is probably no stock investor who doesn’t know of Warren Buffett and his success story investing in stocks. If you do know him, then you know that his recent selling spree is weird and the reason for it is even weirder. Welcome to my channel, home of all things stock investment, money management, lifestyle choices, and financial freedom.
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Let’s get back to the topic of today. Today the question on our lips is why is Buffett selling this 2020? If you don’t know Buffett’s story, then you can check out my post ‘How Buffett made his money.’
If you keep up with my channel, you will see that there have been a lot of activities by Buffett this 2020. Many investors who follow and use his advice are all wondering why he is taking this new approach. Well, today I will be giving my investor opinion, and hopefully, it will help us shed light into the whole confusion.
What has Warren Buffett been doing this 2020?
In the past ten years, Buffett has dedicated his time to acquiring investing in stocks of many companies. Companies like Bank of America, GM, Apple, and Southwest Airlines are some of the big-name companies he has invested in. But this year he has taken a u-turn and is doing the opposite of what he has been doing for a decade.
In his recent 13F filings he released, it shows that Buffett has sold a lot of positions in a lot of companies. The file records 22 stock related moves by Buffett and of that number 17 were all selling moves.
What companies is Buffett selling off?
In recent months, Buffet has sold a total of 17 company stocks. Here is a rundown of all of them and how much of the company he has let go of.
His first set of selling were all Bank or financial-related stocks. They include; Wells Fargo; he sold over 85 million shares, bringing his position down over 26.49%. Next was JP Morgan; he sold over 35 million shares and brought his position down by about 61.52%. PNC financials; this went down by about 41.83%. Bank of New York Mellon; went down by 9.29%, US Bancorp; went down by 0.38%. M&T Bank Corp; went down by 15.72%, Goldman Sachs; was completely sold off.
Airline stocks are another set of stocks which Warren Buffett has done some selling on. But for this sector, he did not just sell a part of his position; instead, he sold them all off completely. These include Delta, Southwest, United, and American airlines.
The other stocks he has completely taken out of his portfolio is a restaurant company named Restaurant Brands International and Occidental petroleum. He, however, reduced stocks like Charter Communication which he sold just under 3.93% of their stock, Visa, which he sold about 5.44% and Mastercard, which he sold about 7.5%. There is also SiriusXM which he sold off 62.24%. However, he bought the sister company Liberty SiriusXM.
What is he buying?
In his filings, five stocks were bought during this period, and they were rather shocking to most people. First, he bought the newly Barrick gold mining company. As I said, he made a lot of shocking moves. In my video ‘Is Buffett buying gold in 2020?’ I covered all the weirdness leading to this decision so you can check that out.
He bought almost 21 million shares in this company valued at around $500 million. Three million Kroger stocks were bought, and Suncor Energy enjoyed over 4.2 million shares from Buffett. Over 5.7 million shares also bought the real estate company store capital. And then there is the sister company Liberty SiriusXM with an added 40.05%.
Reasons for his action
The first reason I can think of is the uncertainty of the market. Warren Buffett always says he isn’t sure what will happen in the market in the next year, but he is careful. He is playing a defensive game, and so he is turning to safer investments for the worst-case scenario. Energy, precious metals, and supermarket stocks are popular for surviving well during the worst of economic times.
Another reason could be the rise in stock value. Right now, investing in stocks is beyond expensive. This could be because the market has been good in the last decade, and investors are hopeful that things will return to that position.
However, that is risky because the market is just a step close to being overvalued. Unemployment is up, businesses are still closed, airlines and other companies are on a halt, and the economy isn’t progressing.
This could mean that the stock market is quickly rising higher than it should, and inflation or depression might not be far off. Benjamin Graham also advocated for stock selling when prices are sky high, and I think Buffett is following in the advice of his mentor. Or it could be that he is selling to be able to buy when the market is settled down, and good deals come up.
The clear point here is that Warren Buffett is defensive in his investment choices and who could blame him? Things are still uncertain, and he is treading the stock waters lightly. In conclusion, I think Buffet is in the right to play safe, and I will certainly be watching to see his next actions. Thank you for staying with me. If you haven’t subscribed then kindly do so, like, share and comment. Your support means a lot to me and my channel.
Recommended for further reading:
- Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage
- Intelligent Investor: The Definitive Book on Value Investing – A Book of Practical Counsel
- The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits
- Stock Market Investing For Beginners: The Investment Guide – How to benefit from the crisis, invest in stocks and generate long-term passive income incl. ETF and Stock Picking Checklist
- The Stock Market Investing Guide #2020: From Beginner to Intelligent Investor within 30 Days – How to Save Money, Generate Passive Income and Reach Financial Freedom