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Warren Buffett's Stake in Apple Approaching a Quarter of Berkshire Hathaway's Entire Market Value
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I was ready to buy AAPL in 2007 just before the release of the iphone but I was talked out of it by some idiot investment manager. I've since wised up and manage my own money now.
Gold has a high holding cost. If economic uncertainty is low, it's hard to justify the expenses when you could be making money with something else. Gold ETFs and receipts make this a lot easier too.
Berkshire holds about 251 million shares of Apple. I think (about) 6 million of them sometimes get missed because they get reported on a different 13F than the one most of Berkshire's equity holdings get reported on.
Mr. Combs or Mr. Weschler decided to buy Apple shares before Mr. Buffett did, but they didn't decide to buy the great majority of the $35 billion worth of Apple shares (at Berkshire's cost basis) which Berkshire now owns. It was Mr. Buffett who did that. And taken collectively the purchases represent one of the best equity investments we've seen in a while. Berkshire is up over $80 billion, well over 200%, on that huge investment in a fairly short period of time.
You and me both brother! My little group of mac friends in high school all knew in our hearts that Apple would survive and thrive once Jobs came back in 1997 but we were all too broke to buy anything. I should have at least grabbed a few shares since 1 from then will be worth 112 after the four way split. Assuming it's $400 at that point, that original $11 would have grown from 0.098 cents per split share to $100 for a 101,818% profit margin.
There are a couple of things to keep in mind when looking at how Buffett runs BRK's portfolio. First, he and Munger are not momentum investors. They look to buy shares of companies with reliable cash flows, a competitive moat that protects from new entrants, and a margin of safety between the price they buy the shares at and their calculation of the intrinsic value. Second, while BRK does trade (and seemingly more frequently now that Combs and Weschler have slices to manage), Buffett and Munger's philosophy is to hold on to positions as long as possible. Something that invalidates their core thesis has to happen to make them dump a holding.
So, the Robinhood (not Robin Hood!) mentality, where trading gets you a balloon and confetti drop or buying-the-dips is viewed as a strategy, is actually the opposite of how BRK operates. In fact, BRK could be viewed as a defensive holding in many ways. When markets are tanking or the financial system is seizing up, BRK usually outperforms by a wide margin.
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It's very unlikely Buffett is buying up gold, the metal. He frequently talks about why he thinks holding gold is a bad idea. For example: https://berkshirehathaway.com/2011ar/2011ar.pdf (page 18)
So, the Robinhood (not Robin Hood!) mentality, where trading gets you a balloon and confetti drop or buying-the-dips is viewed as a strategy, is actually the opposite of how BRK operates. In fact, BRK could be viewed as a defensive holding in many ways. When markets are tanking or the financial system is seizing up, BRK usually outperforms by a wide margin.
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It's very unlikely Buffett is buying up gold, the metal. He frequently talks about why he thinks holding gold is a bad idea. For example: https://berkshirehathaway.com/2011ar/2011ar.pdf (page 18)
Good points, I forget that not everyone is investing to maximize profit. I check my accounts daily, so I can sell off immediately if necessary, but I typically also jump into Inverse funds in a bear market.
Without a doubt the amount of printing is insane, but I don't think it will necessarily have such an immediate impact (after this bull market it likely will though). It all depends on what kind of investor you are, for me there is too much profit to miss out on with defensive tactics.
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They are doing a split this month, iPads are going strong, services are performing well, and Apple Silicon is on the horizon. I think we can expect nothing but ups in the long run.
Buffett doesn’t believe in diversification and has said so many times. Diversification is for people that don’t know what they’re doing.
He’s not buying gold, it’s a miner...and the position is $500M in a $200B portfolio, aka nothing.
It’s also likely Todd/Ted, not Buffett.
Apple was undervalued and misunderstood as Only a hardware manufacturer for at least 5 years. They deserved a higher multiple, got it, and it’s totally reasonable, particularly with services growing like they are.
Apple at 33 times earnings is completely sane.
Netflix, Tesla, Amazon, and many others have much stronger cases of overvaluation. Apple has the earnings and the cash to back up a $2T valuation.
It pains me to this day that I didn't have the cash to invest in Apple Stock in 1997 when it was about $11 dollars per share and everyone thought Apple would go bankrupt. I knew deep down that wasn't going to happen because Steve Jobs had just returned to Apple. I could've been a millionaire by nowAlso, fun side note...I live just a few blocks away from Warren's house in Omaha.
With all respect, hindsight investing is not good for your mind. $100 of Bitcoin or Tesla at IPO would have been nice too. Ignore the peaks and troughs, invest a small amount every month and you'll beat the banks.
They say best time to invest was yesterday
But today will become “yesterday” some day, those who are willing to take the risk might be rewarded no matter what.
Ok then, I guess the S&P 500 index funds don’t know what they’re doing. Everyone should put half their eggs in one basket and see what happens.
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Disagree all you want, but you don’t do extraordinary things by diversifying.
I’m not saying diversification is WRONG; I totally understand why it’s done. I’m just telling you Buffett and Munger say it’s for people who don’t know what they’re doing. And that’s fine for most people bc they don’t have any edge.
That's great advice and I follow it myself but I think he meant he knew it was going somewhere, unlike Bitcoin or Tesla which are pretty risky even today. When you spend all your time in tech and business-- like a lot of us do-- some things become pretty predictable.
S&P 500 index funds are not diversified because they are 100% equities. They only address one economic condition. Buffetts point was this: if you have to hedge your bets with something else then you probably made a poor choice to begin with.
I do want to note though, that beating the banks is nothing to brag about. They can settle for much lower returns than retail investors, if need be, because they have enormous capital. Even making 1% on $100 billion completely dwarfs a regular investor who made 1,000% on an average retirement portfolio.
When Buffett says he doesn't recommend diversification in managing portfolios or investing in index funds, he's talking about professional investors, not retail investors. In fact, he has said many times in the last few years that he thinks putting money regularly into a S&P 500 or all-market index fund is the best thing most retail investors can do.
Another thing to keep in mind is that Buffett's trading edge has diminished over the last 20 years due to the amount of information that has become available online. Finding "cigar butts" with a couple of puffs left (that's the pure form of the Benjamin Graham strategy Buffett follows) or undervalued companies is a lot easier for anybody willing to put a little work in. In the 1960s-1990s, Buffett's golden period, investors either had to get information directly from companies or have a relationship with an investment bank or sell-side brokerage.
So it makes a lot of sense for non-pros to get instant diversification, low fees, and close-to-benchmark returns by buying index funds. Edge now mostly goes to people who can afford to build fiber networks to save milliseconds when trading and have access to order flow information. None of this is available to Jane or Joe Small-Investor.
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"Beating the banks" doesn't really mean anything. The key metrics in portfolio management are risk level (in finance, this means variation of returns not the probability of losing money) and performance relative to the chosen benchmark.
For individual investors, the biggest hurdles to meeting goals are fees and gathering the right amounts and types of assets to offset the risk created by holding concentrated positions. Index funds and index ETFs based on broad indices, such as the S&P 500 and MSCI World, are a simple way for people who don't run portfolios for a living to minimize fees and get instant and ongoing risk mitigation. The only real disadvantage is it is by definition impossible to beat your benchmark. But most individuals will have a hard time doing that anyway.
Another thing to keep in mind is that Buffett's trading edge has diminished over the last 20 years due to the amount of information that has become available online. Finding "cigar butts" with a couple of puffs left (that's the pure form of the Benjamin Graham strategy Buffett follows) or undervalued companies is a lot easier for anybody willing to put a little work in. In the 1960s-1990s, Buffett's golden period, investors either had to get information directly from companies or have a relationship with an investment bank or sell-side brokerage.
So it makes a lot of sense for non-pros to get instant diversification, low fees, and close-to-benchmark returns by buying index funds. Edge now mostly goes to people who can afford to build fiber networks to save milliseconds when trading and have access to order flow information. None of this is available to Jane or Joe Small-Investor.
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"Beating the banks" doesn't really mean anything. The key metrics in portfolio management are risk level (in finance, this means variation of returns not the probability of losing money) and performance relative to the chosen benchmark.
For individual investors, the biggest hurdles to meeting goals are fees and gathering the right amounts and types of assets to offset the risk created by holding concentrated positions. Index funds and index ETFs based on broad indices, such as the S&P 500 and MSCI World, are a simple way for people who don't run portfolios for a living to minimize fees and get instant and ongoing risk mitigation. The only real disadvantage is it is by definition impossible to beat your benchmark. But most individuals will have a hard time doing that anyway.
I think a more recent example could be AMD as well. That was less than $2 2 years ago and look at it now. That was a pretty obvious one, I'm more annoyed at myself for noodling with that. I kept dipping in and out. Still, 40% last year and 40% so far this year I can't complain