Savvy Buffett
By Wed, Nov 18, 2020
Hey Scoopers,
The market calmed down after two back-to-back vaccine news on Monday and last week. — More on that in the “Overall Market” section.
Beyond the overall market, one old retailer soared to an all-time high level. At the same time, another retailer got punished for its long-term thinking. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, Warren Buffett proved to be a savvy investor, once again. — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: All three indices finished Tuesday in the red. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price kept on soaring to above $17,500 per coin.
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Calming Down
The stock market started Tuesday downward and gradually recovered throughout the day. However, the recovery wasn’t enough, and all three indices ended the day in the red. There weren’t any specific new developments, except that the COVID-19 vaccine excitement has calmed down after two back-to-back positive news by vaccine developers on Monday and last week.
Surprising All-Time High
So what happened?
Shares of La-Z-Boy Inc (Ticker: LZB) were up by more than 8% on Tuesday. This is a new all-time high record for La-Z-Boy. It just announced its latest quarterly earnings report and shared a better-than-expected performance. Investors were positively surprised and sent the stock soaring.
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Ignoring the Long-Term
So what happened?
Shares of The Home Depot (Ticker: HD) were down by more than 2% on Tuesday. The company announced its latest quarterly earnings report. Although its business was strong, and the eCommerce sales grew by more than 70%, the permanent increase in operating expenses worried investors who sold their shares and sent the stock to a relatively fair price range. The incremental cost is associated with the company’s transition from employing temporary workers to a more robust compensation structure to support its employees. While this is a costly move, it is also a savvy move. Well-compensated workers are happier and more loyal in the long-term. Investors seem to be ignoring that.
Savvy Buffett
So what happened?
Once again, Warren Buffett, CEO of Berkshire Hathaway (Ticker: BRK.B), proved his investment chops by showing flexibility and openness in his investment approach once again. The company published its quarterly report, and with it, it became apparent that it is stocking up on pharmaceutical companies while reducing its exposure to old-school retail. With the COVID-19 vaccine getting closer to becoming available, perhaps Buffett is betting on the global opportunity of producing and distributing the vaccine.
Noteworthy investments are AbbVie (Ticker: ABBV), Bristol Myers Squibb (Ticker: BMY), Merck (Ticker: MRK), and Pfizer (Ticker: PFE). The surprising move was the selling of the company’s entire position in Costco (Ticker: COST) despite its stellar performance since the start of the COVID-19 pandemic.
Whatever the strategy is, it shows Buffett’s savviness and flexibility in his investment approach despite recent bashing of the media of his ability to stay on top of his investment game.
If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
