Investment Opportunities

The Market Twist Even Buffett Didn’t See Coming

Investor portfolios are being brutalized by the coronavirus.

But I have an important message for you…

Do not beat yourself up over what has happened to your portfolio over the past several weeks.

You could not have seen this coming.

Nobody did.

That includes people who are much, much smarter than you or me.

Today, I want to accomplish two very specific things as we work through this crisis together. I believe that we can not only get through it, but also profit from it.

I’ve been on the front lines of two similar market collapses, and those experiences are proving invaluable to me right now. I believe that those experiences can be equally valuable to you as we move through this.

Here are my two objectives today:

  1. I want to show you how impossible it was for you as an investor to predict what is happening today by looking at the portfolio of the greatest investor in history.
  2. I want to show you why what is happening in the markets today is not worth worrying about.

We are all in this together.

Let’s stay calm and rational and keep moving forward.

Buffett’s Big Bet on the Airlines Is Suffering

Few would argue with me when I say that Warren Buffett is the greatest stock market investor in history. Buffett didn’t get rich by making one or two big bets… he did it by repeatedly picking great stocks for decades.

Buffett attributes much of that success to his first two rules of investing:

    • Buffett Rule No. 1: Don’t lose money.
    • Buffett Rule No. 2: Don’t forget rule No. 1.

Pretty simple, isn’t it?

Buffett has always grown his wealth with a very concentrated portfolio. That means he can’t afford to make mistakes.

Yet, in this market, even the notoriously careful Buffett is suffering – and not just from the market volatility.

He has significant exposure to a group of companies whose very survival is in question.

Chart - Airline Price Movements Since Highs

Yes, Warren Buffett owns airline stocks, and he owns them in a major way.

In total, Buffett has invested more than $10 billion in four different airlines (the recent share price performance of each is reflected in the chart above).

Buffett doesn’t put $10 billion to work unless he has absolute conviction that his No. 1 rule isn’t being violated. That means that when he bought these airline stocks, he did so believing there was virtually no chance of a permanent loss of capital.

Clearly, even Buffett didn’t foresee what the world is now facing.

All of these airlines are now bleeding cash at a nauseating rate. That means that even Buffett’s portfolio is currently showing serious declines.

My point is this…

Buffett is like the rest of us – his portfolio is currently hurting. So don’t beat yourself up for being in the same position as everyone else… including Warren Buffett.

Because what Warren Buffett knows, and what you know as well deep down, is that this is just a temporary situation. This too shall pass. The key is to not panic-sell.

Over the Long Term, The Coronavirus Won’t Impact Your Portfolio

Things look bleak today on every front.

That includes our health, our economy and our portfolios.

But take a deep breath and relax – that is only the near-term view.

The first and by far most important priority right now is to protect your health.

I can assure you that over time, your diversified portfolio is going to be just fine.

I present Exhibit A – the all-time historical performance of the United States stock market.

Chart – The Dow Jones Industrial Average Up 36,264%

Over time, the stock market in our country goes in one direction. That direction is up.

The ride can get a little bumpy, but for the most part, the stock market goes up 7% to 10% per year on average.

Yes, the coronavirus is going to give us one incredible economic punch to the stomach. In fact, I expect that the economic slowdown we are now into will be one for the record books.

But it will end.

Remember what the world has been through over the long time period covered in the chart above.

That includes World War I, the Great Depression, World War II, the rampant inflation in the 1970s, September 11, the tech bubble, the housing bubble, the global financial crisis… and multiple 50% market crashes.

Despite all of that, over time, the stock market marches in one direction. Again, that direction is up.

Things look bleak today, but this crisis too shall pass.

If you are a diversified investor, you don’t have to do anything. Just wait it out.

If you are someone who has cash and is still investing, this is a great time to put new money to work. You can bet that Warren Buffett is doing exactly that today. That wise old fellow has been sitting on more than $100 billion in cash just waiting for something like this.

Over the coming weeks and months, I’ll help find you the best places to put money to work. There are going to be incredible bargains.

We’ll keep an eye on what Mr. Buffett is buying too!

Good investing,


P.S. In his recent State of the Market address, Chief Income Strategist Marc Lichtenfeld proved how the market has only gone up over the long term – and offered viewers his expert guidance on what to do next.

Click here to watch the video.


Jody Chudley is a Contributing Analyst to Wealthy Retirement. He is a qualified accountant with two decades of experience in the international banking and hedge fund industries as a financial analyst.
His background in finance has made him an expert in deciphering financial statements and uncovering deep value and income opportunities. He has written for various websites and financial magazines with a focus on the resource sector and contrarian investment opportunities.

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