At one time in history, it used to be sacrilege for anyone in Dalal Street or Wall Street to criticize Warren Buffett, the World’s greatest investor.
However, presently, the sad fact of life is that all sorts of random novices and punters are taking potshots at him and getting applauded by the intelligentsia.
Warren panicked and dumped Airline stocks at the worst possible time
Warren Buffett was holding a massive consignment of airline stocks in his portfolio.
When the CoronaVirus pandemic brought the airlines sector to a grinding halt and the stocks tanked, Warren panicked.
He dumped his entire consignment in a knee-jerk fire-sale.
Airline stocks plunge at the open after Warren Buffett's Berkshire Hathaway sold out of its positions in American, Delta, Southwest, and United. https://t.co/bOtAgF7Jjq pic.twitter.com/iLoeKKtJio
— CNBC Now (@CNBCnow) May 4, 2020
“The world has changed for the airlines … the airline industry are really hurt by a forced shutdown by events that are far beyond our control,” the Oracle of Omaha explained as a rationale for his action.
Unfortunately, that was the worst possible time to sell.
On that fateful day, a punter on Wall Street named Dave Portnoy, with a massive follower base of 1.5 Million on Twitter, brought a truckload of the stock.
“I don’t want to say I am smarter than Warren Buffett but clearly I am,” he gloated.
“People will fly. We cannot get rid of flying,” he correctly prophesied.
I’m not saying I’m smarter than Warren Buffet…. but I probably am. pic.twitter.com/Fkocnwq6iy
— Dave Portnoy (@stoolpresidente) May 5, 2020
Presently, with the curbs on flying having been eased, airline stocks are surging like rockets and posting mammoth gains.
“Warren Buffet and my dad were wrong per usual. I was dead right per usual,” Dave Portnoy joked.
“But but but but but”.
Check the tapes. #ddtg for life. Warren Buffet and my dad were wrong per usual. I was dead right per usual. https://t.co/HccwkLRief
— Dave Portnoy (@stoolpresidente) May 26, 2020
“The old man lost his fastball. Tell him to get off the tracks or he’ll get run over,” he added, rubbing salt into the wounds.
The old man lost his fastball. Tell him to get off the tracks or he’ll get run over. I don’t want to hurt him. https://t.co/efnXRA0Cox
— Dave Portnoy (@stoolpresidente) June 5, 2020
The airlines are now up 65% since Buffett sold all of them a month ago and wished them well.
Meanwhile the Robinhoodies tripled their holdings in the ETF "JETS" at the same time.
Who is the smart money? pic.twitter.com/2ojYoTFgJc
— Jim Bianco (@biancoresearch) June 5, 2020
Local Gurus advised aggressive buying but Warren Buffett hoarded cash & missed monster rally
Warren Buffett also appears to have been over-fearful about the impact of the CoronaVirus.
At the depth of the meltdown in the market, he was sitting on a massive pile of cash of $137 Billion.
BREAKING: Warren Buffett’s cash pile swelled to a record $137 billion, as Berkshire Hathaway spent most of the market turmoil on the sidelines https://t.co/5D16OQ7fRq
— Bloomberg Markets (@markets) May 2, 2020
He was also dismissive about looking for investing opportunities.
“We haven’t done anything because we don’t see anything that attractive to do. That could change very quickly or it may not change,” he said in a nonchalant tone.
In sharp contrast to Warren Buffett’s indifferent attitude, other Gurus were urging us not to miss the once-in-a-lifetime opportunity to buy stocks at bargain basement prices.
“Buy The ‘Corona Virus’ Fear If You Want Mega Gains In Portfolio,” Saurabh Mukherjea & Sanjiv Bhasin advised us in unison.
“Boss, I Don’t Care About Corona Virus & Will Stay Put In Stocks,” Raamdeo Agrawal announced in his typical rustic style, implying that we have to be fearless daredevils.
“Stocks Are Now At Mouth-Watering Levels. These Are Exciting Times,” Manish Chokhani said, his eyes sparkling.
Hiren Ved also came in with all guns blazing.
He described the crisis as a “Once-In-Lifetime Opportunity“.
Ironically, Bill Miller, a Guru on Wall Street, used Warren Buffett’s own advice given in 2008, to implore us to buy stocks.
“There have been 4 great stock market buying opportunities in my lifetime. The coronavirus has given us the 5th. Shares bought at these prices will prove to be quite rewarding over the next few years, and perhaps a lot sooner. If you missed the other 4 great buying opportunities, the 5th one is now front and center” Bill Miller advised.
Needless to say, the advice has proved to be very profitable indeed.
In just the last one month, the Dow Jones has surged 3200 points in a monster rally, adding 13+%.
The Sensex has kept pace and surged from 31443 to 34287 in the past 30 days.
Warren Buffett made a mistake: Donald Trump
President Donald Trump, a Billionaire businessman who is also sharp as a tack, used the opportunity to emphasize that the Oracle made a mistake selling stocks when he should have been buying them.
“Warren Buffett sold airlines a little while ago. He’s been right his whole life, but sometimes even someone like Warren Buffett — I have a lot of respect for him — they make mistakes,” Trump said.
“They should have kept the airline stocks because the airline stocks went through the roof today,” he added.
Warren Buffett “should have kept the airline stocks,” President Trump says. https://t.co/3p4dSNyGzb pic.twitter.com/EkAif4pqSy
— CNBC (@CNBC) June 5, 2020
I wonder if Buffett $BRK.B regrets selling airline stocks? $AAL $UAL $LUV $DAL continuing to rebound sharply.
— Paul R. La Monica (@LaMonicaBuzz) June 4, 2020
American Airline companies.
Roninhood traders 1
Warren Buffett 0
— Assad Tannous (@AsennaWealth) June 4, 2020
Social media is abuzz with airline stocks doubling post @WarrenBuffett sell. Thanks to @realdonaldtrump for creating the buzz. In short term share price is not function of fundamentals. Hence making fun of Buffett shows your poor understanding of stock valuation and not his.
— sunil damania (@sunildamania) June 6, 2020
Buffett has proven himself over 50+ years and was contrarian even during dot-com boom. His logic and ability to stick to his logic is what sets him apart from all these new-age investors. Many of them are not as old as his investing career.
Also, money can be made in various ways by bulls and bears. Only pigs and chickens will lose. Stupid to belittle one investing style over performance of this 3 month period. It will be interesting to see how many of these ‘investors’ keep the gain over next 2-3 years.
Disclaimer: I increased my stock exposure in March-May.