These 2 Market Moves Cost Buffett $713 Million

Mandatory Credit: Photo by Nati Harnik/AP/REX/Shutterstock (6124058a)Warren Buffett Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview with Liz Claman on the Fox Business Network in Omaha, Neb.
Nati Harnik/AP/REX / Shutterstock.com

Billionaire Warren Buffett has the investment philosophy of holding onto blue-chip stocks that are part of the S&P 500 indefinitely. But in the second quarter of 2020, amidst the worst of the pandemic, Buffet sold off Berkshire Hathaway’s shares of Occidental Petroleum (NYSE: OXY) and United Airlines (NASDAQ: UAL).

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It wasn’t a surprising move, as the commercial airlines industry seemed doomed, at least for the foreseeable future, and Occidental had the distinction of the “worst stock in the S&P 500 in 2020,” Investor’s Business Daily reports.

However, United Airlines has soared more than 30% in 2021, while Occidental holds a ranking as the fourth-best stock in the S&P this year, up 77%, says IBD. The publication gives Occidental a Relative Strength rating of 88, meaning it’s outperforming 88% of other stocks on the market.

Building Wealth

While the move may have taken a chunk out of Buffett’s wealth, he remains the sixth-richest man in the world, with a net worth of $97.2 billion, according to The World’s Real-Time Billionaires list from Forbes. Although Berkshire Hathaway lost $713 million with the transactions, stocks for the firm remain up 13.5%, IBD reports. However, Apple, which represents nearly half of Buffett’s portfolio, has sunk 9% in 2021.

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The Apple slowdown could represent a market correction or another trend analysts spotted in 2021: The S&P 500 appears to have flipped, with last year’s worst stocks up an average of 33% for 2021.

Most notably, travel related stocks like the aforementioned United, along with Carnival cruises (NYSE: CCL) and Norwegian Cruise Line (NYSE: NCLH), have rallied with vaccine distribution and fewer COVID cases. Carnival gained 31.4% this year, with an IBD Relative Strength of 69, and Norwegian jumped up 21%, with a Relative Strength of 80.

Certainly, there’s something to be said for Buffett’s traditional wisdom to buy or hold through the dips to come out on top as a long-term investor.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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