(0:45) - Learning From Warren Buffett’s Buys and Sells (4:25) - Making A Plan That Works For You: Navigating The Down Stock Market (14:50) - Knowing When To It’s Time To Buy or Sell Your Investments (18:10) - Episode Roundup: LUV, ULCC, SAVE, META, NVDA, WSM, RH, V Podcast@Zacks.com
Welcome to Episode #287 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks
Value Investor portfolio, shares some of her top value investing tips and stock picks.
This week, she tries to answer the hardest question in investing: when should you sell a stock?
Warren Buffett has famously said, “Our favorite holding period is forever” and yet he continues to sell positions from his Berkshire equity portfolio.
Buffett has given various reasons for selling over the years but the two most consistent ones are:
1. He wanted to deploy the money into another investment.
2. The company wasn’t doing what he thought they’d be doing when he first bought, so he’s getting out.
Selling the Airlines
Perhaps Buffett’s most recent famous stock sale, was his decision to sell all of Berkshire Hathaway’s airline stocks when the pandemic first hit in 2020. In May 2020, Buffett announced they had sold all four of their airline stocks, which had been worth about $4 billion, in April 2020.
At the time, Buffett said, “the world has changed” and didn’t want to own those companies during a pandemic.
Buffett took a lot of heat for getting out so quickly as the airline stocks rallied off their pandemic panic lows.
But looking back now, his decision doesn’t look too silly.
Southwest Airlines During the Pandemic
Southwest Airlines (, one of Berkshire’s airline stocks. Southwest Airlines rallied on the vaccine news into 2021 but this year it has been a rockier road. LUV Quick Quote LUV - Free Report)
From Mar 28, 2020, which was the pandemic lows, to June 29, 2022, Southwest Airlines was up just 13%. During that same time, the S&P 500 was up 65%.
Buffett’s decision to sell Southwest Airlines fit into his “reasons” for selling as the company’s business had changed dramatically with the pandemic.
And now, over 2 years later, it looks like a good decision.
Buffett Sells All the Time
Buffett has sold out of both winning stocks, and losers. He sold out of IBM for a loss in the last decade after the company wasn’t doing what he thought it would.
IBM was a cautionary tale that Buffett doesn’t like to talk about. But he quickly re-entered technology by buying a big stake in Apple. And Apple is now one of Berkshire Hathaway’s big core holdings.
Buffett always has a plan. You should too.
What’s the Plan? 1. Meta Platforms ( META Quick Quote META - Free Report)
Tracey has owned Meta Platforms for 9 years. She originally bought it for Instagram, as she wasn’t a fan of Facebook. Meta Platforms has grown Instagram to over a billion users. It succeeded.
But now Meta Platforms is going in a new direction. It has changed its name and is investing in a new business based on the Metaverse. The company is changing.
For long -term shareholders, is it time to consider selling Meta Platforms?
2. NVIDIA ( NVDA Quick Quote NVDA - Free Report)
NVIDIA has been one of the best performing stocks of the last 20 years. Shares are up 10,674% during that time, and at their peak in Dec 2021, they were up over 22,000%.
It’s been a bad decision to sell NVIDIA during that time.
But NVIDIA is down 47% year-to-date and that could be giving some long-time investors pause.
Should NVIDIA investors be cashing in some profits?
3. Williams-Sonoma ( WSM Quick Quote WSM - Free Report)
Williams-Sonoma was a big pandemic winner as people rushed out to buy desks and outdoor furniture while stuck at home. It’s West Elm brand couldn’t keep up with demand. And even Williams-Sonoma saw a surge in buying of breadmakers and coffee machines.
Williams-Sonoma is still growing and still has some of the best brands in furniture retail but the economy is now slowing.
Should investors in Williams-Sonoma cash in profit now?
4. RH ( RH Quick Quote RH - Free Report)
RH was one of the best performing stocks of the last decade until 2021 when shares started to slide. Over the last year, RH is down 65%.
Tracey has owned shares of RH since 2016, selling only when the pandemic first hit in 2020.
On June 29, RH issued a warning on its Fiscal 2022 guidance due to “the deteriorating macro-economic environment.”
Does RH fit within one of Buffett’s selling parameters?
What Else do you Need to Know About When to Sell?
Tune into this week’s podcast to find out.