They say for anyone to attract success towards their side, they must first get information from the masters of their line in operation and then act on it. Warren Buffett is the king of the stock market as he has traded for a very long time. However, some upcoming day traders are getting small achievements amid the pandemic as the stock market is fluctuating. Moreover, they are criticizing Warren Buffett for not being proactive in the stock market despite his king title. These upcoming day traders are happily drinking milk out of their bottles but they ought to be careful before they spill the milk on themselves.
I’m not saying I’m smarter than Warren Buffet…. but I probably am. pic.twitter.com/Fkocnwq6iy
— Dave Portnoy (@stoolpresidente) May 5, 2020
What is Day Trading in The Stock Market?
Day trading involves trading financial instruments within trading time such that positions are not open before the trading market closes for the day. Day traders exit the market before it closes on a particular day to avoid risks and bad price gaps. These kinds of traders use margin leverage. For example, in the US, Regulation T allows maximum leverage of 2: 1. Day traders who act on over 3-day trades in 7 days are known as the pattern day traders and need to balance over $20,000 in equity. Some day traders use the scalping technique in which a trader maintains a place for minutes or seconds. If you are not familiar with the terms, then it will take some time to sink in. Let us see the moves of Warren Buffett’s critics.
Warren Buffett and the Critics
All the hullabaloo started a few weeks ago when Warren Buffett sold his airline stocks amid the pandemic. David Portnoy, who got little gains on the airline stocks, condemned Buffett’s actions and portrayed himself as the best trader. Moreover, the President of the United States also criticized Buffett’s decision saying that he should have kept them. However, after a few days, there was a drop in the airline stocks and the king seemed to be right about the trend of the market.
As of 17th June 2020, there was a significant recovery of losses in the stock market of the US but still, Buffett made no move. He upheld his investing belief that seemed to annoy his critics. Their uproar increased much more than some of Buffett’s long-time investing friends lost confidence in Warren. Berkshire Hathaway’s cash seems to pile company is not utilizing its cash reserves which have accumulated to over $130 billion. This means that there are no massive ongoing investments.
Bill Ackman dumps $1 billion stake in Warren Buffett's Berkshire Hathaway https://t.co/6gc0LrSgXO via @nypost
— Bill Dye (@bilbospizza) May 29, 2020
Bill Ackman, a billionaire, sold his $1 billion stakes in Berkshire Hathaway, a conglomerate. He says that he will utilize the profits of the sale on another investment. As of May, the Pershing Square Capital Management rose over 25%. So what’s the performance of Berkshire Hathaway?
Berkshire Hathaway Performance
During the start of this year, the S&P 500 index dropped significantly. Berkshire Hathaway also dropped back the wider market. However, because of market fluctuations, the S&P 500 index managed a rise of 40% and the company increased by 14%. Similarly, in 2019 the S&P 500 rose over 30% and the Berkshire Hathaway increased by 11%. Over history, financial analysts know that Berkshire Hathaway does well than the wider market in bear markets and drop in bull markets.
Warren Buffett remains Silent
As the day traders keep boasting over their minor success and thinking they have outsmarted Warren Buffett, the king chooses to remain quiet. However, the question is how long will they maintain their success. Warren Buffett decided to remain quiet and use his ideology on investment during this time. He says that there is nothing yet attractive to buy as the stock prices are expensive.
I tell you why Buffet not buying anything.
He heard me telling everyone save your foin cash. Stocks are expensive as hell, and my Man Buffet is listening"Buffett on why he hasn’t made any big investments: ‘We don’t see anything that attractive’" https://t.co/gBB0xprH52
— Market Stories (@MarketLexical) May 3, 2020
I believe that Warren Buffett is making the right decision by remaining silent and not engaging with the newbies in the stock market. They are all forgetting Buffett’s quote: Be fearful when they are greedy and be greedy when they are fearful.
More:
- David Portnoy Goes Off On Warren Buffett Over The Airline Stocks
- Generation Y Made a Wrong Choice on the Airline Stocks
