2016 was a pretty great year for Warren Buffett; he made more than any other billionaire, increasing his wealth by about $12 billion, and reclaimed his spot as the second richest man in the world. Currently, the Oracle of Omaha is valued at $74 billion, and you might be wondering how he did it.
While Buffett is wise and knows his way around the stock market better than most of us, there was still a little bit of luck with a lot of strategy to boost Buffett’s fortune an entire $12 billion in the course of a year.
First, it’s no secret that the election created a huge surge with bank stocks, and Buffett benefited from that nicely. It’s estimated that post-election his wealth increased about $8 billion— 2/3 of the entirety of his earnings for the year. Even though Buffett was known to support Hilary Clinton, he still won something from the election, and he says all the while he knew no matter which candidate was elected that he and Berkshire Hathaway would be just fine, and he was right.
Another huge event in Buffett-land this year was that Berkshire acquired stocks for each of the 4 major airlines. Previously, Buffet was known to avoid airline stocks, as they require a lot of capital and they have low and slow returns. Either way, he now has stakes in each of the 4 major airlines as well as other aviation businesses— NetJets, Precision Castparts, and FlightSafety. Airline stocks were pretty level until they surged 15% post-election. Perhaps, Buffett thinks 2017 will be a big year for airlines.
Additionally, Buffett kept within his circle of competence. We’ve long known that the octagenarian prefers safe bets that he understands, and the perfect example are his bank stocks. Financial stocks, as a whole, have risen about 17% since the election. Bank of America alone has increased from $7.14 per share to $22.45, and Buffett has $5 billion tired up with the company.
While it isn’t realistic for all of us to invest like Buffet, he is considered the wisest investor of our time for a reason. I’m excited to see what 2017 has in store for Warren Buffett and Berkshire Hathaway.