Warren Buffett, Webinar and Psychology Update
As countries and states are slowly reopening, I hope you and those close to you are staying well and in good health. I also encourage you to join me in following all government health directives. This has been a very difficult time for many people and we really do need to keep on flattening the curve.
I am writing to you today in order to share a few important announcements. First and foremost, please join me this Wednesday in our Success webinar where I will be speaking about how I use moving averages for short- term trading. Although moving averages are perhaps both the most well-known and common indicators that traders use, everyone uses them differently (and that actually is quite okay since there is no right or wrong way to use them). In this webinar, I will show you how I use mine, and I hope that will help you to develop your own system based on moving averages.
How to Use Moving Averages for Short Term Trading
Wednesday, 6 May, 8pm ET
Webinar Room (Lifetime members only)
Secondly, as you may recall, we hosted Dr. Kenneth Reid, a trader and a clinical psychologist, for one of our April Success webinars a few weeks ago. We were overwhelmed by the positive feedback we received from our members following this presentation. On his website, daytradingpsychology.com, Dr. Reid offers a Mastermind Pro program that contains a series of highly recommended videos on improving one’s trading psychology. The program, which includes monthly updated videos, currently costs $47 per month, however, it is with great pleasure that we have licensed Dr. Kenneth Reid’s Mastermind Pro program at no additional charge to our lifetime members. Please enjoy watching these videos in our Psychology Center. We believe they will be very useful in improving your trading performance. We are grateful to Dr. Reid for allowing our members to have access to his decades of experience. If you happen to work with Dr. Reid outside of BBT, or by any chance know him yourself, we’d appreciate it if you would take this opportunity to send him a thank you note. We sincerely hope you benefit from this new addition.
Last but not least, the 2020 Berkshire Hathaway Inc. (ticker: BRK.A) annual shareholder meeting took place this Saturday and things were certainly a lot more different than they have been in previous years. As you all probably know, this annual meeting is a celebration of investing, where thousands (some 40,000 in 2019 to be exact) of Warren Buffett fans and investors are in attendance. This year however, with lockdowns and social distancing in place, there were only 12 people in attendance alongside one member of the media. Interestingly, The New York Times reported only 12 people also attended their AGM way back in 1965! The annual meeting was scheduled to last for only an hour, but Buffett and his team carried forth for more than 4 hours, giving the audience lessons on the economy, investing and America in general. I guess unprecedented times calls for unprecedented actions! Here are some of the key takeaways of the meeting in case you missed the live stream on Saturday.
Continue to Bet on America: “We faced tougher problems, and the American miracle has always prevailed”
If you were looking for some short- term insight of where the market is going, you would have been disappointed. Although Buffett refused to provide any short- term outlook on the market, he does remain bullish on America over the next 20 years. When it comes to the virus itself, he said, “The range of possibilities has narrowed now vs. when this started. It is not as bad as it could have been nor is it as good as it could have been.” On the other hand, when it comes to the economy, Buffett noted, “The range of possibilities is still extremely wide on the economic side. I don’t really know of any parallels of the most productive country in the world sidelining its economy and workforce.”
He emphasized that his investing view has not changed, and stocks will continue to outperform fixed income and Treasury bonds in the long run. Berkshire still holds over $180 billion in common stocks of various companies, with over $64 billion of Apple Inc. (ticker: AAPL) at the top of the pack.
No Love for the Airlines: “The world changed for airlines, and we wish them well”
Berkshire sold $6.5 billion of equities from its airline portfolio in April, solely based on Buffett’s determination that his investment was a “mistake”. Berkshire owned shares in the four largest U.S. airlines, specifically American Airlines Group Inc. (ticker: AAL), Delta Air Lines Inc. (ticker: DAL), Southwest Airlines Co. (ticker: LUV) and United Airlines Holdings Inc.Continental (ticker: UAL). Putting this in perspective, his airline portfolio had cost him an aggregated $7 to $8 billion.
Buffett warned investors who believed that this is now a good time to buy these stocks, saying, “The world has changed for the airlines,” and the industry might not ever recover to their pre-COVID-19 levels.
Big Shoutout to Powell and the Fed: “[The Fed] operated with unprecedented speed and determination”
And of course, more than anything, Buffett was impressed with the decisiveness of the Federal Reserve in the past few weeks: “I always had Paul Volcker on a pedestal in terms of Fed chairmen; … Jay Powell, in my view, belongs with him on that pedestal.”
When asked about concerns regarding the Fed’s balance sheet expansions, Buffett commended them, “We don’t know the consequences of doing that, but we do know the consequences of doing nothing, and we owe the Fed a great thank you.”
Conclusion: Business as Usual
While there was much that was said at Berkshire’s annual meeting, and many commentators and analysts have been busy posting their reactions, the truth is that for us traders, it is business as usual.
It feels only right to end this email with one of my favorite quotes from the man himself:
“The difference between successful people and really successful people is that really successful people say no to almost everything.”
Regardless of whether you are an investor or a trader in the market, the key to success is saying no to almost everything that comes across your screens while selectively picking the right stock, and only the right stock. I myself have lived by these words when it comes to day trading and, if you’ll indulge me for a moment, I’ll add one more thought: stay away from low float stocks.
There were plenty of hidden gems in Berkshire Hathaway’s annual meeting. If you are interested in watching the entire proceedings, you can watch using the link below will take you there: https://www.youtube.com/watch?v=69rm13iUUgE&t=4280s
Thanks for reading this email. See you in chat!
To your success,