Warren Buffett’s record of turning Warren Buffett market panics into buying opportunities is no accident: it rests on preparation, liquidity, and a disciplined ability to separate short-term shocks from permanent damage. Two episodes, separated by roughly half a century, illustrate the approach more clearly than any theory can.
The Salad Oil Scandal and the Birth of a Strategy
In November 1963, the collapse of Anthony De Angelis’s Allied Crude Vegetable Oil operation triggered more than $175 million in losses for banks and financial institutions, according to MarketsWiki. De Angelis had used tanks filled mostly with water, disguised as salad oil, to secure loans. American Express’s warehousing subsidiary had issued warehouse receipts certifying the collateral, making the parent company liable.
The scandal hammered American Express stock. Most investors sold. Buffett bought.
His reasoning was precise. American Express’s warehousing unit was a victim of the fraud, not its architect. The financial hit, though severe, was finite and resolvable. The core business remained intact: a prestigious brand, a loyal customer base, and a proven model. Buffett judged that the share price had been punished far beyond what the underlying business deserved.
The bet paid off to an extent that shows just how concentrated conviction can be rewarded. As the stock recovered, the American Express position grew to represent 40% of Buffett’s partnership portfolio at its peak, according to the Fundamental Finance Playbook.
As of 31 March 2026, American Express (AXP) still represented 17.43% of Berkshire Hathaway’s reported 13F equity portfolio, the second-largest holding behind Apple at 21.99%, across 29 positions worth $263.1 billion in reported market value, per the Q1 2026 13F filing on ValueSider.
Tesco Shows Where Warren Buffett Draws the Line on Market Panics
The Tesco episode is the necessary counterpoint. Berkshire began building a stake in the UK supermarket in 2006 and by 2012 owned more than 5% of the business. By end-2013, the position was worth approximately £1 billion, representing 3.7% of Tesco, according to BBC News.
When an accounting fraud surfaced in 2014, Buffett did not hold. He sold, at a loss he later described as a ‘huge mistake’ in the original investment. Berkshire’s total loss on Tesco exceeded $700 million, with Tesco shares having fallen around 43% by the time those losses were reported, CNBC reported.
The distinction from American Express was not that one fraud was larger than the other. It was structural. At Tesco, the fraud ran through the business itself, raising the question of whether the investment case Buffett had built was valid at all. He could not assess whether further revelations were coming. With no reliable floor under the thesis, he cut.
At American Express six decades earlier, the fraud was external. Once exposed, the subsidiary’s liability could be quantified and contained. The main business continued to function. Buffett could assess the damage and conclude it was overdone in the share price.
Three Mechanics That Make the Difference
The two cases point to three practical factors that allow Buffett to act when others freeze.
First, he maintains a standing framework for valuation. He does not build one in the middle of a crisis. That means when prices dislocate, he is already close to a decision rather than starting from scratch.
Second, he keeps liquid cash available. Berkshire’s cash position has long given him the ability to move without selling existing holdings to fund a new one. Private investors cannot always replicate this, but the principle applies: holding some cash in reserve is not a drag on returns if it allows you to act when valuations are genuinely attractive.
Third, and most critically, he asks a single question under pressure: is this a temporary setback to a sound business, or does it undermine the investment case itself? At American Express in 1963, the answer was the former. At Tesco in 2014, he concluded it was the latter.
AXP’s weight in Berkshire’s 13F portfolio, still at 17.43% more than six decades after the original purchase, suggests the first judgement has held up rather well. The Tesco loss at over $700 million underlines what happens when that question is answered too slowly.
