Warren Buffett: Selling Costco Stock Was ‘Probably a Mistake’ — 3 Takeaways
Written by
Adam Palasciano
Edited by
Cory Dudak
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Warren Buffett, CEO of Berkshire Hathaway Inc., has an estimated net worth of $136.6 billion as of today, according to Forbes. This makes him the sixth richest person on the planet. Known for his expert stock picks and strategy, even he’s made some investing mistakes along the way.
According to Business Insider, Berkshire Hathaway surprised the investing world when the company sold 4.3 million shares of Costco stock valued at $1.3 billion in June 2020. It’s estimated that Warren Buffett’s company missed out on a $1.5 billion gain by selling Costco stock at that time instead of holding onto its shares.
Costco Stock Has Surged to New Heights
Over three months in 2020, Berkshire Hathaway cashed out shares of Costco for about $1.5 billion, which would be worth a whopping $3 billion today.
Berkshire Hathaway grew its holdings in the famous retailer from a split-adjusted 710,000 shares worth $32 million at the end of 1999, to 4.3 million shares valued at $1.3 billion in June 2020. Since Buffett sold the company’s shares, Costco stock has soared between 88% and 127% to all-time highs. Costco (COST) shares currently trade at about $734.40.
Fast forward to 2021 and Buffett admitted during a shareholder meeting that selling the company’s shares of Costco was a mistake.
Takeaways From Buffett’s Miscalculation
Here are a few key takeaways you can learn from Buffett’s miscalculation so you don’t make the same mistake:
- Check Company’s Long-Term Performance Before Selling: Established companies like Costco have a history spanning decades. Be sure to check past shareholder reports, stock charts from previous years and investor analysis before selling. If a company has a history of strong performance over many years, you might want to think twice before you decide to sell.
- Evaluate Your Investment Goals: Consider your short and long-term investment goals before selling your stocks. Are you planning to make a down payment on a house this year? Or, are you trying to eliminate a large debt? These are good reasons to sell shares, providing you with liquidity to achieve near-term financial goals.
- Ask Yourself Why You’re Selling: If a company’s stock suddenly surges to an all-time high overnight — or contrarily if the price plummets suddenly — it might be tempting to sell quickly to cut your losses or take a profit. However, it’s important not to make decisions solely on emotion, but instead to make calculated investment decisions.
More From GOBankingRates
