Postcards: Thanks, Uncle Warren

The trade of the year is not in AI or high beta stocks. It's in Occidental Petroleum (OXY). This has been my most profitable trade of 2023... and we're only "halfway" done thanks to Warren Buffett.

Thursday, June 29, 2023

Dear Fellow Expat:

Everyone has a favorite Uncle.

The uncle who let you have a beer underage. The one who wouldn’t tell your parents when you did something wrong. The one who bails you out…

My favorite uncle is Uncle Warren.

Uncle Warren Buys More Occidental

The trade and investment of the year is in Occidental Petroleum (OXY). With shares trading down in the $ $57 range this week, Buffett bought even more of the company.

Berkshire now owns 25% of Occidental. The conglomerate can buy up to 50% of the outstanding shares. So, we’re only halfway through Buffett’s buying process.

Buffett is buying over and over… and over… in what we call the Buffett Buy Zone. All you need to do is sell put options around this Buffett Buy Zone, and you’ll make money.

The August 18, 2023, OXY $52.50 put trades for $0.65. Sell that put. Instead of putting up $5,185 in margin, buy the August 18 $50 put. It’s called a put spread.

Now, if you do that, you’d put up $220 in margin to make $30.

That’s…