Investment

3 Times I Think Warren Buffett Was Wrong About an Investment – The Motley Fool Canada

Published

3 years ago

March 21, 2021

Home » Investing » 3 Times I Think Warren Buffett Was Wrong About an Investment

Even the world’s most successful and popular investor is far from infallible. Warren Buffett regularly highlights his errors and missed opportunities in his annual letter to shareholders. However, average investors and the media seem to be more focused on his successes, which distorts the investment legend’s impact on the financial world.

Here’s a look at the top three biggest investment mistakes the Oracle of Omaha ever made and a closer look at his recent bets.

Top three mistakes

Some of Warren Buffett’s biggest and most recent mistakes were in the field of technology. The investment legend added IBM to his portfolio in 2011, only to dump the entire stake seven years later. Over the course of Buffett’s position, IBM declined over 30%. Meanwhile, the rest of the stock market was surging rapidly. The bet cost him billions in real and opportunity costs.

Buffett’s other two errors were also tech related. However, these were errors of omission. He missed out on Microsoft, despite being friends with founder Bill Gates for several decades. He also admitted that he was too late to recognize the promise of Amazon. “Those just aren’t my games,” he told a reporter when he finally added Amazon to the portfolio in 2019.

Warren Buffett’s blind spots

It’s clear that technology and innovation are blind spots for the legendary value investor. Buffett’s strength lies in finding safe bets that others have overlooked — not in paying a premium for a revolutionary shift that is overhyped but eventually lives up to expectations.

For investors, this means Buffett’s opinions on tech stocks should be taken with a grain of salt. His recent comments on Bitcoin are a good example. Buffett has called the cryptocurrency worthless. However, the asset has outperformed most other asset classes over the past decade and has survived over 12 years without a major outage or hack.

Canadian investors may want to set Buffett’s comments aside and focus on Purpose Bitcoin ETF (TSX:BTCC.B), which offers exposure to this technology. Buffett may admit his mistake many years later, but you shouldn’t miss out on handsome gains by then.

Bitcoin’s performance has been much better than the rest of the tech sector. Over the past month, the Nasdaq 100 Index is down 5%, with some market leaders losing double digits. Bitcoin, however, is flat over the past month and is actually trading close to an all-time high.

As more large corporations and billionaires get involved, the price of this cryptocurrency could stabilize over time. You could add BTC to your portfolio directly, but the Purpose BTC ETF qualifies for your Tax-Free Savings Account. In other words, you could gain multi-bagger returns without tax consequences.

Bottom line

Warren Buffett’s track record and reputation is impeccable. However, he is just as error-prone as any other investor. Buffett’s core competency is finding undervalued stocks in sectors he understands deeply. However, he seems to have a blind spot for tech trends.

Over the past two decades, Buffett has missed out every major tech revolution, from smartphones to digital advertising and e-commerce. Now, he seems to be missing out on the Bitcoin revolution. You shouldn’t miss out on it too. Consider taking a closer look at the Purpose Bitcoin ETF.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Microsoft and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.

Let’s block ads! (Why?)

Source link

Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

Published

6 days ago

September 6, 2024

Anne Joseph

TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 239.24 points at 22,749.04.

In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.

The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.

The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.

The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.

This report by The Canadian Press was first published Sept. 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Economy

S&P/TSX composite up more than 150 points, U.S. stock markets also higher

Published

2 weeks ago

August 29, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.

The S&P/TSX composite index was up 171.41 points at 23,298.39.

In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.

The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.

The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.

The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.

This report by The Canadian Press was first published Aug. 29, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Investment

Crypto Market Bloodbath Amid Broader Economic Concerns

Published

1 month ago

August 5, 2024

Harry Miller

The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.

The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.

Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.

The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.

Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.

Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.

Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.

Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.

The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.