Warren Buffett has been selling stocks. Should you do the same?

first_img Rupert Hargreaves | Sunday, 10th May, 2020 Our 6 ‘Best Buys Now’ Shares I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address See all posts by Rupert Hargreaves Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Warren Buffett has been selling stocks. Should you do the same?center_img Last weekend, Warren Buffett made a shocking announcement. The ‘Oracle of Omaha’ told the world he’d been selling stocks during the first quarter of 2020. This announcement caught many investors by surprise. Buffett has built his reputation, and fortune, on buying stocks when everyone else is selling.So, why did he decide to take this course of action, and should other investors follow his lead?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Buffett starts to sellAccording to the limited information we have, Buffett sold several billion dollars of stock in the opening quarter of 2020. It appears he hasn’t reinvested the bulk of the proceeds.Buffett was selling airline stocks in particular. He later said the reason why he decided to sell airline stocks is that the outlook for the sector has changed dramatically. Despite booking losses of several billion dollars on the positions, he decided to sell rather than face years of uncertainty. This approach makes a lot of sense.Whenever he evaluates a business, Buffett always bases his analysis on company cash flows. If he can’t predict the cash flows for the foreseeable future, he doesn’t invest.That seems to be what’s happened here. As the outlook for airline stocks has deteriorated, cash flow forecasts have become impossible. As such, it isn’t that surprising Buffett sold the airline holdings.Not being greedyAs Warren Buffett sold his airline investments, he also avoided making any other deals. This is surprising. The investor is usually in a rush to buy stocks when they are on sale. The fact that he didn’t, suggests he’s worried about the outlook for companies.How should investors react to this news? Buffett provided the answer himself last weekend. He noted that while the outlook for some companies has deteriorated, over the long term, the global economy should recover from its current setback.Indeed, over the past few decades, the global economy has suffered many significant difficulties. However, the market has always recovered from these setbacks over the long run. There’s no reason to believe it won’t see the same performance this time around.Buffett recommended that investors should buy a low-cost market tracker fund to profit from this trend. A low-cost FTSE 100 or FTSE 250 tracker fund would give an investor exposure to some of the biggest companies in the UK. This should help them achieve strong capital growth as well as income over the long run.So, investors shouldn’t read too much into Buffett’s recent trading activity. While he was selling stocks in the first quarter, he still believes the stock market is the best place to create wealth over the long run.Even though the near-term outlook for global equities is uncertain, buying a low-cost tracker fund should help you grow your financial nest egg without having to worry about daily market fluctuations. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Image source: The Motley Fool “This Stock Could Be Like Buying Amazon in 1997” Simply click below to discover how you can take advantage of this.last_img

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