By Jinsui Y.
Warren Buffett is known as the most successful investor
in the world. As a fine example in investment, his decision and action in
business are all concerned by public. He usually invests in a wide range of
investment. However, it is observed that he purchase more stocks in the field
of energy last year in 2015. He invested 1 billion dollars in oil in
Phillips66. Why did he turn his investment to energy?
As The Wall Street Journal said, the profits of insurance
service had decreased a lot in his investment in recent years. The compensation
for car’s insurance in GEICO increased in 2015. There is a reason that the
price of crude oil slump caused the price of oil decreased 50% in America. Therefore,
more people chose to drive, and they drive more often. So, the number of
traffic accident was increased. Another reason is that there are more
competition in insurance service area, so, they profits became smaller.
However, many people would say that the price of oil
continued decrease from 2014 to 2015. How could Warren Buffett make such an
unadvisable decision? However, will the price of oil continue to decrease in
2016? That is necessarily so. For example, it is calculated that the price of
crude oil had decreased rapid from 1997 to 1998, however, it rise suddenly and
sharply to 105% in1999. So, it is very possible that the crude oil marketing
will be change and the price will increased. In that case, the crude oil stocks
which purchase by Warren Buffett in very low price will bring him a huge
profit.
In a word, investment always has risk, but it is also the
catalyst bringing about advance in development of business industry.
Image from:
Akin, Oyedele. While price were crashing, Warren Buffett kept increasing his bet on oil. Digital image. http://www.businessinsider.com/warren-buffett-energy-2016-1. 14 Jan 2014. Web. 14 March 2016.
References:
References:
Travis, Hium. The Motley Fool. Warren Buffett Admits Renewable
Energy Is Big Threat to Utilities.10 Mar 2016. Web 14 March 2016.
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