Tesla zooms past $700 billion in market value after nearly hitting 500,000 deliveries in 2020

Elon Musk
Elon Musk.

  • Tesla stock climbed as much as 5% to a fresh high on Monday, boosting the electric-car company’s market capitalization to north of $700 billion.
  • Elon Musk’s automaker exceeded its production target of 500,000 vehicles last year, and fell just short of 500,000 deliveries.
  • “So proud of the Tesla team for achieving this major milestone!” Musk tweeted about the news.
  • Tesla’s stock price soared by more than 740% in 2020.
  • Visit Business Insider’s homepage for more stories.

Tesla shares jumped as much as 5% to a record high on Monday after the automaker revealed it delivered about 500,000 vehicles to customers last year. The stock-price surge added up to $36 billion to the automaker’s market capitalization, lifting it past $700 billion for the first time.

Elon Musk’s electric-car company recorded 499,550 deliveries in 2020 – 450 short of its target. However, Tesla said its delivery figures tend to be “slightly conservative” and the final number could vary by 0.5% or more. Therefore, Musk and his team counted the performance as achieving their goal.

Read more: GOLDMAN SACHS: Buy these 37 stocks that could earn you the strongest returns without taking on big risks in 2021 as the recovery and vaccine distribution get underway

“So proud of the Tesla team for achieving this major milestone!” Musk tweeted. “At the start of Tesla, I thought we had (optimistically) a 10% chance of surviving at all.”

Tesla hustled to hit its numbers last quarter. Its deliveries stood at about 318,000 at the end of September, meaning it had to deliver a demanding 180,000 vehicles in the fourth quarter.

Musk’s company also achieved its production target. It manufactured about 509,000 vehicles in 2020, exceeding its goal of 500,000.

Tesla’s stock price skyrocketed by about 740% last year, boosting its market cap to north of $600 billion. Here’s a chart showing its remarkable rally:

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Billionaire investor Chris Sacca mocks ‘Robinhood bros’ for being reckless: ‘Stonks never go down!’

chris sacca
  • Venture capitalist Chris Sacca dismissed amateur traders’ huge gains in 2020 as the product of lucky timing in a recent tweet.
  • “To everyone who got into trading stocks this year, I have a little hard truth for you: You’re not actually that good at it,” the billionaire founder of Lowercase Capital and former “Shark Tank” star said.
  • Sacca mockingly praised day traders in a follow-up tweet after weathering backlash for his comments.
  • “To the angry Robinhood bros who got into trading stocks this year: I was wrong. You’re amazing,” he said. “Stonks never go down!”
  • Sacca has repeatedly underscored the risks of trading stocks and other assets such as Bitcoin, especially with borrowed money.
  • Visit Business Insider’s homepage for more stories.

Newbie traders who scored massive windfalls in 2020 simply got lucky, billionaire investor Chris Sacca said in a recent tweet.

“To everyone who got into trading stocks this year, I have a little hard truth for you: You’re not actually that good at it,” the former “Shark Tank” star and founder of venture-capital firm Lowercase Capital said. “You just caught a wild bull market. Take some money off the table.”

Read more: Wall Street’s biggest firms are warning that these 7 things could crash the stock market’s party in 2021

Sacca’s comments were met with swift backlash. Dave Portnoy, the Barstool Sports founder who became the face of a new generation of day traders earlier this year, told Fox Business that he doesn’t know who Sacca is, but the investor “sounds like a sore loser and an idiot.”

The Lowercase chief – an early investor in Twitter, Uber, and Instagram – responded to the criticism with a sarcastic tweet ridiculing Robinhood users, one of the most popular trading apps.

“To the angry Robinhood bros who got into trading stocks this year: I was wrong. You’re amazing. This has nothing to do with the market. It’s all you and your mad skillz. Don’t take profits off the table. Double down, on margin. Borrow everything you can. Stonks never go down!”

In internet slang, stonks is a deliberate misspelling of stocks.

Read more: BANK OF AMERICA: Buy these 16 medtech stocks with strong fundamentals that are set to soar post-pandemic

Sacca – who made his fortune in the early 2000s then lost a huge chunk of it when the dot-com bubble burst – has repeatedly cautioned amateurs about trading risks, particularly with borrowed money.

“What percent of retail ownership of crypto is supported by leverage? What about stocks? I am beyond worried about the debt lessons that a generation of app traders weren’t around to learn a cycle ago,” Sacca replied to a December 26 tweet by Bitcoin bull Mike Novogratz underscoring the risks of excessive leverage.

“Don’t borrow to trade stocks/BTC,” Sacca tweeted a few hours later.

Read more: The founder of the world’s first vegan ETF explains how her market-beating fund is naturally built to include the pandemic’s biggest winners – and why industry titans like Facebook and Uber fit the bill

Sacca has issued similar warnings in the past.

“I’m here to tell you that trading millions of dollars you don’t have is a thrilling way to ruin your health and financial future. Fun!” he tweeted in November 2019.

“Investing is a great way to make money. Trading is a great way to lose it. Do yourself a favor and hide your “Stocks” app forever,” Sacca tweeted in 2013.

Sacca and his wife and business partner, Crystal, shifted their focus from day-to-day investing to tackling issues such as climate change, voter suppression, and criminal justice reform in early 2017.

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Billionaire ‘Bond King’ Jeff Gundlach said stocks will crash, predicted a weaker dollar, and questioned bitcoin in a recent interview. Here are the 10 best quotes.

gundlach
2011 Jeffrey Gundlach co-founder and Chief Executive Officer and Chief Investment Officer of DoubleLine speaks at the 16th annual Sohn Investment Conference in New York May 25, 2011.

  • Jeff Gundlach, the billionaire investor known as the “Bond King,” predicted in a RealVision interview in October that stocks would crash in less than 18 months.
  • The DoubleLine Capital CEO also said the US dollar would dive in the long run, argued that tech stocks like Apple and Amazon were the only US equities worth owning, and questioned bitcoin, welfare, and Chipotle’s valuation.
  • Here are Gundlach’s 10 best quotes from the discussion.
  • Visit Business Insider’s homepage for more stories.

In a RealVision interview filmed and released in early October, the billionaire “Bond King” Jeff Gundlach said stocks would crash within 18 months, predicted that the US dollar would tumble in the long run, and voiced his doubts about bitcoin.

Gundlach, the founder and CEO of DoubleLine Capital, also called out Chipotle’s valuation, criticized welfare, and argued that the only US equities that made sense to own right now were the largest technology stocks.

Here are Gundlach’s 10 best quotes from the conversation, condensed and lightly edited for clarity:

1. “Valuation makes absolutely zero difference when you’re in a true, brutal bear market. You just go to prices that you just can’t believe.” – on the tricky 1994 bond market and how it prepared him for the financial crisis.

2. “I’m actually long the dollar now, even though I don’t believe in it at all. It’s a good investment for the next five years.” Gundlach added that he was “very, very negative long term on the US dollar” because of the ballooning budget deficit and the prospect of higher inflation, and that he sees betting against it as “the big trade for the years ahead.”

3. “If I want it to invest for my great-great-great-great-grandchildren, I’m positive that certain real-estate investments and certain resource investments would be obvious winners. Who cares about your great-great-great-grandchildren?” – on the need for fund managers to balance the lower risks of a longer investment time frame with investors’ impatience.

Read more: GOLDMAN SACHS: Buy these 15 stocks set to deliver the strongest possible profit growth and subsequent returns through year-end

4. “If you want to own US stocks, you should own those six knowing that you’re going to take a bloodbath if you overstay your welcome … You’ve just got to have your finger on the exit button or pretty close by, but I think that’s your only chance of making money.” – advising people that they should own Apple, Amazon, and the other “big tech” stocks that have driven the market in recent years.

5. “The one that just blows my mind is Chipotle. I just can’t understand why the stock has tripled over the last six months. It just baffles me. Isn’t the price-to-earnings ratio like 150 or something? That’s a lot of tacos.”

6. “I do think that within 18 months it’s going to crack pretty hard. When the next big meltdown happens, I think the US is going to be the worst-performing market.” – predicting a stock-market crash that would be exacerbated by a weakening dollar.

Read more: ‘The largest financial crisis in history’: A 47-year market vet says the COVID-19 crash was merely a ‘fake-out sell-off’ – and warns of an 80% stock plunge fraught with bank failures and bankruptcies

7. “It’s comical how people talk about modern monetary theory or universal basic income as some wacky idea. We’ve been doing it since the 1960s. What do you think welfare is? It’s universal basic income, just for a certain subset of the population. It hasn’t exactly solved the problems. In fact, in my view, it’s made it much worse.”

8. “I don’t believe in bitcoin. I think that it’s a lie. I think that it’s very tracked, traceable. I don’t think it’s anonymous.” Gundlach later added that he was “not at all a bitcoin hater.”

9. “I prefer things that I can put in the trunk of my car. I prefer my Mondrian on the wall to a digital entry that has the same value.” – on his preference for physical investments

10. “It will be quite a pleasant experience to not be in the car on the first wheel of the roller coaster that’s coming.” – on his cautious approach to investing in anticipation of a crash

Read more: Bank of America lays out its scenario for how the next big top in stocks will form – and pinpoints the trigger that could cause a meltdown shortly after

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A bitcoin ETF could finally become a reality in 2021 after an SEC filing from VanEck

FILE PHOTO: A bitcoin sign is seen during Riga Comm 2017, a business technology and innovation fair in Riga, Latvia November 9, 2017. REUTERS/Ints Kalnins/File Photo
A bitcoin sign.

  • A bitcoin exchange-traded fund could finally land on Wall Street in 2021 after VanEck filed an application with the Securities and Exchange Commission this week.
  • Regulators have previously rejected numerous bitcoin ETF proposals, including one from VanEck in September 2019.
  • But bitcoin’s surge to new highs in 2020 – driven by increased adoption from institutions and a changing of the guard at the SEC – could improve the chance of regulatory approval for an ETF.
  • Visit Business Insider’s homepage for more stories.

A bitcoin exchange-traded fund could go live in 2021 if an application from VanEck filed this week with the Securities and Exchange Commission proves successful.

A bitcoin ETF operated by VanEck would follow the path of gold-trust ETFs in that it would hold the underlying bitcoin, the filing said. The VanEck Bitcoin Trust would reflect the performance of the MVIS CryptoCompare Bitcoin Benchmark Rate.

Wall Street has been attempting to launch a bitcoin ETF for years, and VanEck had its last proposal rejected in September 2019.

But now, with a changing of the guard at the SEC and bitcoin’s surge to new highs – driven in part by increased adoption from institutions – the chance of approval could be higher than ever.

Jay Clayton, who has opposed the launch of a bitcoin ETF during his tenure, stepped down as chairman of the SEC earlier this month. And Treasury Secretary Steven Mnuchin, who has not been receptive to bitcoin, is set to be replaced by Janet Yellen next month.

Bitcoin is up nearly 300% year-to-date, and big-name Wall Street institutions have warmed to the cryptocurrency. MassMutual acquired $100 million worth of bitcoins earlier this month, and high-profile investors like Paul Tudor Jones and Stanley Druckenmiller have also gotten on board with the cryptocurrency.

Read more: Ron Baron earned a $4.2 billion windfall just from investing in Tesla. The legendary investor told us why he still expects a 30-fold return from Elon Musk – and shared the biggest lessons and mistakes of his career.

In the corporate space, Square and PayPal have been purchasing bitcoin in recent months and facilitating the buying and selling of bitcoin in their respective apps.

Still, there are hurdles for a bitcoin ETF approval as it seeks acceptance among regulators, and it’s likely to hinge on who President-elect Joe Biden chooses to run the SEC.

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US stocks flat as rollercoaster 2020 comes to a close

NYE Ball Drop
Waterford crystals were installed to the Times Square ball for New Years Eve Celebration in New York City, on December 27, 2020

  • US stocks opened mostly flat on Thursday morning to finish off a rollercoaster year for markets. 
  • Initial jobless claims declined by 19,000 to 787,000, beating the consensus estimate of 828,800.
  • Watch major indexes update live here.

US stocks opened relatively flat on Thursday morning to finish off a rollercoaster year for markets. 

The number of Americans filing for unemployment benefits for the first time dropped unexpectedly last week- the second straight week of declines. Initial jobless claims declined by 19,000 to 787,000. The consensus estimate was for jobless claims to rise to 828,800.

Meanwhile, continuing claims decreased to 5.22 million in the week that ended Dec.19. That’s 150,000 less than the 5.37 million claims economists projected.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Thursday:

Read more:We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Several cryptocurrency exchanges including Crypto.com, Coinbase, and OkCoin said this week they were suspending trading of the XRP token following the SEC’s complaint against Ripple Labs, XRP’s developer. 

“XRP (the coin) is one foot in the grave,” Phil Liu, Chief Legal Officer at Arca, told Business Insider on Wednesday. “Ripple, the company, may be insolvent by the end of 2021 if it can’t raise money by selling XRP and its other products aren’t profitable.”

Oil prices were lower. West Texas Intermediate crude declined as much as 0.68%%, to $48.07 per barrel. Brent crude, oil’s international benchmark, was down 0.72% to $51.26 per barrel.

Gold was up 0.43%, to $1,901.60 per ounce.

Read more:Market wizard Jeff Neumann started trading with $2,500 and grew it to $50 million. He shares 6 timeless rules that helped him reach millionaire status in his first year.

 

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US stocks rise as record-setting stimulus rally continues

House Speaker Nancy Pelosi
The House passed a $2.2 trillion stimulus to help keep the US economy afloat during the coronavirus pandemic.


US stocks climbed on Tuesday to continue Monday’s rally which saw all major indices close at new record highs.

The House passed a bill Monday to increase the $600 federal direct payments to $2,000. The vote passed 275 to 134, with forty-four House Republicans joining Democrats to approve the bill. The Senate may not approve the bill, though Senate Minority Leader Chuck Schumer said he’ll push for a vote. 

“The House just took a strong, bipartisan vote to pass $2,000 checks,” Schumer tweeted Monday evening. “Tomorrow, I’ll move to pass the bill in the Senate. Workers, families, and people are crying out for help. Every Senate Democrat is for this relief. Senate Republicans should not stand in the way.”

President Donald Trump signed the $900 billion bipartisan coronavirus relief package on Sunday and renewed his calls for Congress to raise the amount of the checks to $2,000.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Tuesday:

Read more:Lazard’s top ESG stock-picker outlines the 3-part strategy he’s used to beat 75% of his peers and smash his benchmark without paying Tesla-like prices

Cryptocurrency token XRP fell as much as 31% Tuesday morning after online platform Coinbase said it would fully suspend the digital token from its marketplace by mid-January. This follows the SEC’s complaint against developer Ripple Labs.

The SEC said on December 23 Ripple had effectively been running a $1.3 billion unregistered offering with its sales of XRP, which the regulator deems a security and not a cryptocurrency.

XRP has lost around 75% in value after hitting a two-year high in early November. 

Electric-truck company Nikola soared as much as 16% on Monday after JPMorgan said it sees 2021 as a “less drama-filled” year. JPMorgan said Nikola “cleaned house” before year-end given its exit from two partnerships that “were hastily thrown together by the founder, and committed NKLA resources to non-strategic initiatives,” according to the firm. Nikola is up roughly 57% this year, but has dropped significantly from its record highs this summer. 

Oil prices moved higher. West Texas Intermediate crude increased 1.32%, to $48.25 per barrel. Brent crude, oil’s international benchmark, increased 1.22%, to $51.48 per barrel.

Gold rose 0.26%, to $1,885.30 per ounce.

Read more:Peloton has climbed 415% this year. We asked 3 analysts – including one who expects a 78% stock decline – for their 2021 outlooks with the prospect of gym restrictions easing.

Read the original article on Business Insider

Business Insider’s 6 best investing stories of 2020

Dear Readers,

It’s been an unprecedented year in countless ways, and the extreme volatility seen in the stock market was no exception. After suffering the swiftest bear-market plunge in history, US equities recouped those losses in mere months and now sit near all-time highs.

Most major events (the worst recession in 100-plus years, negative oil prices) were byproducts of the coronavirus outbreak. But some (repeated yield-curve inversions in early 2020, the US presidential election) weren’t. There were so many forces to contend with that you’d be excused for forgetting some of them were even in play.

If you aren’t yet a subscriber to Insider Investing, you can sign up here.

Ever the safety net, the Investing team at Business Insider was with you every step of the way, dissecting the vicious fluctuations while simultaneously telling you how to adjust your portfolios and capitalize on the chaos.

To that end, we’ve selected the six best Investing stories of the year. Enjoy the selection below, and we’ll see you back here in your inbox on the first Tuesday after the holidays.

Thanks for reading!

— Joe


(1) We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Business Insider spoke to the nine top-performing US mutual fund managers of the year, based on their performance through November 6. They shared insights into investing strategies and stock picks that prevailed through the crisis, and shared their top trade ideas for 2021.


(2) Inside Eagle Investors, the 20,000-member online community run by 2 Indiana University students that’s helping spearhead the Gen Z day-trading revolution

Indiana University undergraduates Vishu Namburi and Ishaan Sandhir created Eagle Investors in July 2019, hoping to form a tightly knit community of options traders.

Pandemic-fueled market volatility drove much of Eagle Investors’ expansion, and both moderators and clients have made money along the way. But the group’s rapid growth presents a challenge for the founders who strive to maintain closeness within the community while still making space for new members.


(3) Nancy Zevenbergen is in the top 1% of investors over the past 5 years. She breaks down what she looks for in young companies – and shares 4 stocks she thinks could be market leaders 10 years from now.

Nancy Zevenbergen – founder of Zevenbergen Capital Investments, which has about $5 billion in assets – has a knack for investing early in companies that see extraordinary growth. She detailed for Business Insider her market-beating approach to investing, and shared four stocks she thinks could be the next market leaders.


(4) 14 Wall Street experts told us the single metric they’re each watching to assess coronavirus market fallout – and give their portfolios a leg up

Business Insider asked 14 investment strategists and analysts in April to share one crucial metric, index, or signal they’re closely tracking as the novel coronavirus throws markets and economies into disarray. Their answers illustrate where experts have been looking to gauge the way forward for markets and the economy.


(5) Robert Shiller, Rick Rieder, and 18 more of the brightest minds on Wall Street reveal the most important charts in the world

In February, amid the onset of the coronavirus pandemic, Business Insider asked 20 financial experts – including Nobel-winning economists and acclaimed investment chiefs – to share charts that capture the biggest trends in markets.

The charts included illustrate opportunities for the decade ahead, potential catalysts for the next economic recession, and other big themes that will inform where investors should be putting their money now.


(6) The ultimate guide to getting started in real-estate investing – according to entrepreneurs who built multimillion-dollar empires from scratch

The most successful investors are highly adaptable. Take Jacob Blackett, the CEO of Holdfolio and founder of SyndicationPro, for example. He lost $70,000 on his first deal, but has since amassed a portfolio of 1,000 units.

The best ones are also rigorous about choosing the right strategy, methodology, and location for their investments. To aid your own decision-making, we’ve centralized months of reporting on real-estate investing trends into a single guide.

Read the original article on Business Insider

AstraZeneca jumps 4% after CEO says its COVID-19 vaccine will reach efficacy of 95%

AstraZeneca ceo Pascal Soriot.JPG
AstraZeneca CEO Pascal Soriot in London in 2014.

  • The COVID-19 vaccine developed by AstraZeneca could be 95% effective in preventing the virus, CEO Pascal Soriot told the Sunday Times over the weekend.
  • Soriot also said he thinks the vaccine could protect against a new strain of COVID-19 that is more contagious than the original and is spreading throughout the UK.
  • AstraZeneca submitted vaccine data to UK health regulators last week and emergency use authorization could be imminent, with a roll-out to UK citizens expected by early next week.
  • Shares of AstraZeneca jumped as much as 4% in Monday trades.
  • Watch AstraZeneca trade live here.

The COVID-19 vaccine developed by AstraZeneca could receive emergency use authorization from UK regulators by Monday or Tuesday this week, with a rollout of the vaccine to UK citizens expected in the first week of 2021, according to The Telegraph. 

AstraZeneca submitted its COVID-19 vaccine data to UK regulators on December 23, and CEO Pascal Soriot believes data will show the efficacy of its vaccine in preventing COVID-19 infections is as high as Pfizer & BioNtech’s at 95%.

“We think we have figured out the winning formula and how to get efficacy that, after two doses, is up there with everybody else,” Soriot told the Sunday Times newspaper. 

Data for the vaccine will be published at “some point,” Soriot told the paper.

Shares of AstraZeneca jumped as much as 4% in Monday trades to $50.28.

Read more: ‘It could be a Roaring 20s that will end badly’: An equities chief who oversees over $7 billion shares his investing playbook and major predictions for 2021 and beyond

Soriot added that he believes AstraZeneca’s COVID-19 vaccine will protect against a new strain of the virus that is thought to be more contagious than the original strain and is spreading in the UK. 

“We think the vaccine should remain effective” against the new strain, Soriot told the Sunday Times, adding that “we can’t be sure, so we’re going to test that.”

A highly efficacious COVID-19 vaccine from AstraZeneca could hasten the rollout and administration of vaccines to people around the globe, given that the two-dose vaccine doesn’t require ultra-cold storage like the mRNA vaccines developed by Moderna and Pfizer/BioNtech. 

The AstraZeneca vaccine requires refrigeration of 36 degrees to 46 degrees Fahrenheit and can be stored for at least six months. 

The US has entered a contract with AstraZeneca for 300 million doses of their vaccine, outpacing its 200 million order for Moderna and Pfizer/BioNtech’s vaccine.

Read more: Deutsche Bank says you need to own these 10 telecom stocks as vaccine progress spurs a 2021 recovery for beaten-down sectors

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US stocks jump after President Trump signs $900 billion stimulus bill

Stimulus Bill
  • US stocks edged higher on Monday after President Donald Trump signed a $900 billion stimulus bill after previously leaving it up in the air as he advocated for $2,000 stimulus checks.
  • The bill Trump signed will include $600 stimulus checks, though Trump and Democrats continue to advocate for an increase to $2,000.
  • The House of Representatives will vote on a measure on Monday to increase the size of the checks to $2,000, though Senate Majority Leader Mitch McConnell has not shown willingness to support bigger checks.
  • Watch major indexes update live here.

US stocks gained on Monday after President Donald Trump signed a $900 billion stimulus bill that includes $600 stimulus checks and an extension of the Paycheck Protection Program and unemployment benefits.

After the stimulus bill was passed by Congress, Trump signaled he may not sign the bill as he complained about “pork spending” and advocated for an increase in stimulus checks to $2,000 from $600.

The signing of the bill prevented a government shutdown that would have occurred at midnight tonight. Democrats and Trump continue to advocate for an increase in stimulus checks to $2,000. 

Senate Minority Leader Chuck Schumer tweeted on Sunday, “The House will pass a bill to give Americans $2,000 checks. Then I will move to pass it in the Senate. No Democrats will object. Will Senate Republicans?”

Senate Majority Leader Mitch McConnell has shown no signs of supporting $2,000 stimulus checks.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Monday:

Read more: ‘It could be a Roaring 20s that will end badly’: An equities chief who oversees over $7 billion shares his investing playbook and major predictions for 2021 and beyond

AstraZeneca is on the verge of receiving emergency use authorization from the UK for its COVID-19 vaccine, according to The Telegraph. The rollout and administration of its vaccine could begin in the country in the first week of 2021.

AstraZeneca’s CEO said its vaccine candidate could reach 95% efficacy, on par with vaccines from Pfizer and Moderna, in an interview with the Sunday Times. Shares of AstraZeneca jumped as much as 6% in Monday trades.

Oil prices edged lower. West Texas Intermediate crude fell as much as 0.19%, to $48.14 per barrel. Brent crude, oil’s international benchmark, fell 0.02%, to $51.28 per barrel, at intraday lows.

Gold rose as much as 0.52%, to $1,893.00 per ounce.

Read more: A hedge fund chief who oversees $2 billion breaks down why we’re in for a 61% stock-market crash over the next 18-24 months – and shares 3 types of companies he’s shorting right now

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Warren Buffett drinks 5 cans of Coke a day – here’s why he switched from Pepsi after nearly 50 years

warren buffett cherry coke
Berkshire Hathaway CEO Warren Buffett

  • Warren Buffett famously consumes five cans of Coke a day.
  • However, Berkshire Hathaway’s billionaire boss drank Pepsi for nearly 50 years, and only switched sodas because an old neighbor intervened.
  • Don Keough, a coffee salesman who lived across the street from Buffett in Omaha and turned down a chance to invest with him, eventually became Coca-Cola’s president and operating chief.
  • After learning that Buffett drank Pepsi-Cola Cherry, Keough sent him samples of the upcoming Cherry Coke, spurring Buffett to switch brands and pronounce Cherry Coke as the official drink of Berkshire Hathaway’s annual shareholder meeting.
  • View Business Insider’s homepage for more stories.

Warren Buffett famously consumes five cans of Coke a day. However, he drank Pepsi for nearly 50 years, and only switched sodas because an old neighbor intervened, Glen Arnold wrote in “The Deals of Warren Buffett Volume 2: The Making of a Billionaire.”

“I’m one quarter Coca-Cola,” the 90-year-old investor told Fortune in 2015, explaining the drink accounts for 25% of his daily calorie intake.

Buffett’s money has followed his mouth. His Berkshire Hathaway conglomerate owns about 10% of Coca-Cola, a stake worth around $22 billion.

The so-called Oracle of Omaha especially likes Cherry Coke. He agreed to have a cartoon of himself slapped on cans of the drink when it launched in China in 2017, and declined to charge a fee, he told Yahoo Finance.

However, Buffett isn’t a lifetime loyalist. His son Howard used to call him “Pepsi Warren” because of his affinity for the rival soda, one of Howard’s childhood friends told CNBC.

Buffett switched to Coke because of Don Keough, a coffee salesman who lived across the street from him in Omaha, Arnold wrote. In 1960, Buffett dropped by Keough’s house to inform him that he was starting a partnership, adding, “If you give me $10,000 I might be able to do something with it.”

Keough was skeptical of Buffett, given his neighbor lacked a conventional job and found time to entertain his kids during the day. 

“I didn’t have it, but I could’ve borrowed it from my father. But can you imagine giving $10,000 to a guy who doesn’t get up and go to work in the morning?” Keough said in a TV interview with former Disney CEO Michael Eisner.

Keough missed a trick. A $10,000 investment with Buffett could have been worth $93 million by 2018, Arnold estimated.

Keough’s company was ultimately bought by Coca-Cola in 1964, and he rose through the ranks to become the group’s president and chief operating officer in 1981. Four years later, he read in a magazine that Buffett was a fan of Pepsi-Cola Cherry. He swiftly wrote to his former neighbor, offering to send him some samples of the still-in-development Cherry Coke, which he described as “nectar of the gods.” 

The samples hit the mark. In 1986, Buffett warned his shareholders to expect a change at Berkshire Hathaway’s yearly gathering.

“After 48 years of allegiance to another soft drink, your Chairman, in an unprecedented display of behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it will be the Official Drink of the Berkshire Hathaway Annual Meeting.”

Keough isn’t only responsible for Buffett’s favorite soda. His leadership of Coca-Cola – combined with the stock-market crash in October 1987, and the company’s resilient growth and strong fundamentals – led to Buffett buying $1.3 billion worth of its stock between 1988 and 1994, Arnold wrote.

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