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Berkshire halves Apple stake, boosts cash to $277B as it gets 'defensive'
- pseudosaid 2y agoSomeone’s going to rebuy at a lower price later
- talldayo 2y agoThe real question is whether those bagholders will make as much as Berkshire did holding the same stock.
- dgfitz 2y agoI wonder how this plays given the fearful/greedy rule.
- kevmo 2y agoBuffett just sold for an enormous profit while the market was trending near all-time highs. Selling near all time highs = being fearful while others are being greedy.
- HenryBemis 2y agoAnd he now has a hefty amount in cash, so if things go bad, he can buy Low again, and enjoy another rally to the previous highs. If not, then he has enough cash to buy/support the next big thing.
- freedomben 2y agoI think the bears are vastly underestimating the size and power of the moat (or garden wall) that Apple has built. Apple's brand loyalty is ludicrously high, but even the people who don't care that much about the brand are way more trapped in the ecosystem than most people realize. Seeing a heavy Apple user try switching to Linux on their laptop was a real eye opener for me. I'm bullish on Apple stock because they could afford to go a very long time without huge wins, and still be wildly powerful and in control of the tech lives of a huge percentage of the population. Apple also iterates and polishes over time until it's the best, and they have plenty of time. Going bearish on Apple is a bad move IMHO.
- agumonkey 2y agoGotta say they handled the post jobs era well financially.
- currio 2y agoWhat you said (if true) makes Apple a great business. And your reasonable arguments make a good case for that. But does it make a good investment? A good investment is investing in a great business at a reasonable price. If the price is unreasonably high, then even a great business makes for a bad investment.
- freedomben 2y ago> But does it make a good investment? A good investment is investing in a great business at a reasonable price. If the price is unreasonably high, then even a great business makes for a bad investment. This depends on whether you are thinking short-term or long-term. Short-term, I don't know because at this point I'm exclusively a long-term investor (something I might should have mentioned in my original comment). The current price (for a company as big and mature as Apple) is essentially a gauge of how bullish vs bearish big investors are feeling about the sector and the specific company. It may fluctuate up and down a little bit based on news and such, but long-term I expect it to do well.
- lazide 2y agoLong term or short term doesn’t change that question at all.
- tsunamifury 2y agoYea this guy doesn’t understand how returns work at all. What he described makes it both long term and short term a bad investment. But he seems uneasy what “buying at peak” is.
- freedomben 2y agoSure it does. It doesn't mean it's impossible for long-term to be overpriced, but it is definitely a lot less likely to be significant/impactful, and if it is overpriced and experiences a correction, you're much more likely to be able to ride it out and average into a reasonable position over time. With long term you're looking for several % growth per year, over multiple years. With long term you're much less sensitive to overpricing. Short term on the other hand carries significant risk of overpricing, because you're concerned about tiny % changes over short periods of time. With volatility/risk, the length makes a big difference.
- jsnell 2y agoDiscussed yesterday: https://news.ycombinator.com/item?id=41147381 https://news.ycombinator.com/item?id=41147381
- johnwheeler 2y agoIt’s pretty simple. Can he get ~5% risk free from Uncle Sam or more than that in a year on the apple position. $14 billion a year you don’t have to pay any state taxes on. For as long as he decides to hold it. That’s like the net income of a bank like Wells Fargo.
- BoredPositron 2y agoYeah it was over for me when he went on that Watson will change the world rant after the jeopardy stunt.
- johnwheeler 2y agoWhy did this get a downvote lol. It’s true.
- brcmthrowaway 2y agoHow doesnt he pay tax?
- johnwheeler 2y agoYou don’t pay state taxes on treasuries
- dangrossman 2y agoBerkshire's insurance float value is on the same order of magnitude. They underwrite both property insurance and cyber insurance. That's a scary business to be in right now. Hurricanes, thunderstorms, tornados, cyber attacks have all become devastatingly more damaging recently. Maybe that's a good reason to stockpile cash right now regardless of their outlook on any particular stock.
- nemonemo 2y agoCan't they simply charge more premium and pay for the reinsurance? Uncertainty is where the premium comes from, and I would think insurance business in BRK should thrive with it.
- ikekkdcjkfke 2y agoGood, hopefully this lifts some of pressure to monetize us
- seizethecheese 2y agoPrecisely the opposite. If Apple stock drops, there will be sudden, intense pressure to monetize.
- loceng 2y agoMight this have anything to do with Apple starting to reposition production outside of China?
- rvz 2y agoWarren Buffet taking giant profits and dumping half of their AAPL stock at the top of market prices is really another reason to be bearish on this AI hype which hasn't materialised to anything profitable for 98% of AI startups and neither has it convinced Wall St that the massive operational costs were worth it. (The 2% is OpenAI, Anthropic and the other >$15B AI startups.) This just means that we should be getting a short term market correction. The ones that have benefited off of the hype are the Big Tech incumbents that will be just fine and those who dumped their skyrocketing shares on retail, which includes the folks at Nvidia. At this time, some stocks and most AI startup valuations are extremely inflated and must correct and go down.
- freedomben 2y agoDo you think this is resulting from AI hype? Buffett is usually so macroscopic that I would be inclined to think this is an overall feeling, not one related to AI. But, if you think the tech sector is going to experience a big AI deflation, that could be something I suppose. Interesting to consider.
- fragmede 2y agoI guess the question is if someone's shown him ChatGPT yet.
- seizethecheese 2y agoAbout 50% of adults in the western world have tried it. I’m sure Buffet has.
- dgfitz 2y agoI’d be so curious to know what prompts he used.
- IshKebab 2y agoIs Anthropic even making money? Seems to me the only current winners in the AI game are OpenAI and established giants like Google. Also I don't think you can dismiss AI as pure hype like you can with e.g. web3. Clearly there have been and continue to be amazing and useful advances.
- ChrisArchitect 2y ago[dupe] More discussion: https://news.ycombinator.com/item?id=41147381 https://news.ycombinator.com/item?id=41147381
- Kalanos 2y agoApple bet big on proprietary ARM chips, but now Qualcomm has commoditized this space. Apple followed Meta into VR/AR without a killer app.
- IshKebab 2y agoI don't think Apple "bet big" on them, they just made some very good chips because that's obviously good for their business. They didn't stake their business on nobody else also doing that. VR/MR I'll give you though. The weird thing there is that games are clearly the only (non-porn) application for VR that has any kind of real-world appeal, and Apple went in completely the opposite direction.
- Reubend 2y ago> Apple bet big on proprietary ARM chips, but now Qualcomm has commoditized this space. In my opinion, their bet on proprietary ARM chips was a success. They're a full generation ahead of Qualcomm, and they were able to successfully market their laptops based on superior battery life far before the Windows market caught up (which they're just starting to do now). That bought them a big lead. But more importantly, they now have in house experience designing chips that will be an advantage if they want to innovate in new categories.
- Kalanos 2y agoSo what? They could have payed someone to do that. They should focus on the user experience, not chips. For example, they let Siri languish for decades. Apple was glued to the hands/eyes of consumers, but neglected to train an AI/ gather meaningful data to improve their product. Now they are playing catch up with Apple Intelligence.
- Reubend 2y agoI totally agree that they dropped the ball on Siri, but they had plenty of money and employees to work on that if they wanted to. I'd argue that the canned car project and the Vision Pro consumed way more resources than the in house silicon, for a worse return on investment.
- layer8 2y agoAt Buffett’s age, I would shift more to cash as well. ;)
- hamasho 2y agoI bet in a few years the CEO of Apple will be replaced by someone who's only interested in short-term gains, and the stock price may increase even higher at a sharp rate for like a decade or two. Then it becomes like Boeing or Intel; everyone hates it or it's not relevant anymore. If I win this bet, I'll gain small satisfaction, and my all-index-fund portfolio will be, I don't know, just fine? edit: typo
- more_corn 2y agoBe greedy when everyone else is cautious and be cautious when everyone else is greedy. When the bubble pops buy the good deals and wait for the recovery.
- enos_feedler 2y agoEveryone here points to the high P/E ratio as the reason to sell. That is simply the reason to sell NOW. The reason it's being sold is he is obviously less bullish on the company. It doesn't take much to understand why. The thing that led to Apple's growth as a company and a stock is something called the iPhone. The thing that drove sales of the iPhone was the fact they were not just getting better, they were getting _different_. More cameras. Different kinds of sensors. Now they are just getting better. And less better each generation. Benedict Evans would call this the top of the "S" curve. It matters when selling someone a new phone in a new box is the main thing that generates your profits. You can be a great company with great leadership and great products. You can't defy the laws of the "S" curve and market saturation. It doesn't matter how good you are. This is why Buffett and Co. are unloading. I wouldn't be surprised if it all gets sold by the end of the year. EDIT: I called this sale two weeks ago in a tweet: https://x.com/jkingyens/status/1813214574436303114 https://x.com/jkingyens/status/1813214574436303114
- jti107 2y agoits been pretty much the same iphone for last 5 years...the only new innovation have been satellite texting messages, 120 hz screens and improved camera/cpu. yet Apple has continued to do well...i think your example of S curve and market saturation is fine but Apple has an entire ecosystem and is catering to luxury and high end market so the same rules dont apply (see LVMH as an example in luxury goods). they sell phones, tablets, computers, high end audio, watches, services and all these things just work well together. no other company on the planet comes close...other than maybe google.
- enos_feedler 2y agoWhile that is true in hindsight, we had different emotions when the phones 3 and 4 years ago actually came out. We were on autopilot because of all the innovation that came before it. We overshoot and then come back to reality. Also, I actually think Covid also masked a lot of deceleration due to the S curve topping out because it pulled in a lot of future demand. There are multiple reasons why the market demand is not going to line up perfectly with the actual products that launch each year.
- fasttalk1932 2y agoI wonder if this is less about Apple and more about beating the market. Are they seeing a big correction coming?