Warren Buffett’s biggest investment coup during his 58 years of leading Berkshire Hathaway is Apple. With Apple’s market value now above $3 trillion, Berkshire Hathaway’s stake in the world’s most valuable company (some 915 million shares) is worth $176 billion, more than five times its cost of $31 billion.
How did Buffett do it? He recognized Apple’s strengths and bought the shares inexpensively… While he is known for moving away from a deep-value investment approach—favored by his mentor Benjamin Graham—to growth stocks, he is disciplined in what he pays.
When Buffett was accumulating what has become a nearly 6% stake in Apple from 2016 to 2018, he was paying about 15 times earnings when the stock traded at a split-adjusted price in the low $30 area.
Buffett, 92, recognized seven years ago that Apple wasn’t just a technology hardware company deserving a low price-to-earnings multiple, but a consumer and services company with a sticky customer base and phenomenal brand.
Buffett remarked at the time that one reason he bought the stock was that when he would take his grandchildren to an Omaha Dairy Queen (owned by Berkshire), they would be glued to their iPhones.
MacDailyNews Take: Investor’s could do worse — much worse — by not simply following Buffet’s investments and advice.
Those who have iron stomachs in the face of risk, year after year, can make multiple millions of dollars with relatively very little invested, if they go “all in” on the right company long term.
Diversification is… a protection against ignorance. — Warren Buffett
On December 20, 1996, when Apple announced the acquisition of NeXT and the return of Steve Jobs, an Apple share sold for 18-cents.*
In April 2003, Apple shares sold for 20-cents each.* Even as recently as January 07, 2019, Apple closed at just $35.64*!
Anyone who invested in AAPL, even in later years, without the loss-making hedges in the name of diversification, sports an incredibly better annualized return than, for example, “legendary investor” Peter Lynch’s 29.2% (which is rather laughably weak when viewed by long-term, mainly AAPL investors).
The actual “legendary investors” would be those who began buying AAPL upon the return of Steve Jobs, never stopped buying AAPL year after year, reinvested dividends in AAPL every quarter, never wasted money on diversification in the name of “mitigating risk,” but who instead went “all in” on AAPL and never sold a share.
Diversification, in the absence of investing perfection (which does not exist), also does an excellent job of mitigating big, life-changing profits.
*Prices adjusted for splits and dividend distributions.
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so what your saying is to be the greatest fund manager of all time is to basically put all your eggs into the AAPL basket
I must be smarter than Warren. I saw Apple‘s strength already in 2004 when I started investing in Apple. Sometimes their shares went down 70%, 50%, 30% and I didn’t let go but waited. They always came back and went much higher than before. One piece of advice: Don’t panic.
That’s what I did in 2000. If I’d had spare money a few years earlier, I would have invested in AAPL back 1997 with the return of Steve. Happy to have kept my investment. It’s pretty decent now 😀
Bought the majority of my AAPL between 1996 and 2002. Didn’t sell much until required to do so in my IRA. So I beat Buffett’s “brilliance” by at least 20 years. And Buffett didn’t start buying AAPL until he noticed one of his lieutenants doing so. It wasn’t his original idea.
Buffet did just fine. He earned more riding MSFT and others for the years when Apple prioritized user experience over profits. Now Apple and its online fan club care about stock price over everything else. Actual usability and control on Apple hardware and software has regressed significantly since 2010, when iOS lockin was the clear new direction. Macs were practically abandoned to the point Apple forgot how to make a reliable keyboard on its laptops. Mac Apps suddenly became dumbed down iOS app ports.
Buffet doesn’t use Apple or MS gear so he’s happy with mediocrity as long as it has a wall and a deep moat.