I think I read that Buffet has been delegating more stocks picking to others and that it’s those folks, not Buffet, who makes the tech picks.
Also, I don’t think it’s “volatility” that kept Buffet out of those stocks — it’s more that he just doesn’t feel that he understands them (which is totally reasonable).
I have heard Buffett interviewed on CNBC about Apple several times, he says he made the decision, after one of his portfolio managers brought it to him. Berkshire Hathaway owns four huge stores called Nebraska Furniture Marts. Think Super Walmarts on Steriods. Each of these stores has a huge Apple kiosk inside its electronics department. He can see in real time what Apple products are selling, preferences, returns, etc. Using this info, he says that Apple has a certain stickiness with its customers, once you go Apple you don’t go back. So while all the idiot analysts were spreading FUD about weak sales last quarter, Buffett knew what was happening and bought with both hands. This is a big vote of confidence in Apple. After all, how many analysts have their own Apple stores to gauge what’s selling?
The whole "it just works" and "enriching people's life in a transparent way" is what they're selling.
The tech fades away and you are left with just what it does. WHAT IT DOES FOR PEOPLE IS WHAT THEY"RE SELLING.
Exactly why I ditched Microsoft and bought a Macbook Pro in 2008.
Apple has the 'Eace of Use' thing pretty well sewn up especially when compared to MS etc. After fighting the Windows madness and mess (I called it the Windows 'madmess') in my day job I couldn't face it at home. By making it easy for people to use they create a uniqueness that keeps people buying their stuff. Easy to use things are just one of the aspects of Apple tech that make the company what it is.
My friends who use Windows are always complaining about their computers having issues. They didn’t get my email because their computer was acting up. They couldn’t send me the document I was expecting because their computer couldn’t connect to the Internet. They got hit by ransomeware and Best Buy charged them $195 to fix it. They keep paper copies of everything because they often lose the digital ones due to their computers going down. One friend told me he erases and re-installs Windows once a year just to be safe. My church’s office computers were down for two days because an update bricked them and the kid from the high school who “works” on them couldn’t get there to fix them.
Warren Buffet does his homework and looks at cash flow over the long term in deciding what stocks to buy. Apple has a firmly entrenched customer base that is willing to pay top dollar for its products. As an added benefit, its products have a natural obsolescence after about three years so there will be a regular stream of purchases for the foreseeable future. Apple will likely outperform the market in cash flow and dividends and therefore is a good investment for the long term.
Unfortunately, a lot of people will use this information to justify claims that Apple is severely undervalued and will see massive short-term increases in stock price. They aren't looking at a 10% rate of return year-over-year as a great thing.
“ 500 IBM shares are dwarfed by my 7500 Apple shares. “
Very nice. Just curious about when you bought your first Apple Stock? I started accumulating about the time of the OS X Public Beta and stopped buying in the low $300s before the 7-1 split.
Needless to say, it is more than a small part of my retirement portfolio.
I increased both my Apple and IBM stakes over the last several months. But my 500 IBM shares are dwarfed by my 7500 Apple shares. I clearly have relatively more confidence in IBM’s future than Buffett has, but we’re of similar minds regarding Apple.
Congrats on those AAPL shares. I recall you bought some time ago. I originally got in at $22, right after the first split and have only bought and held since.
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Also, I don’t think it’s “volatility” that kept Buffet out of those stocks — it’s more that he just doesn’t feel that he understands them (which is totally reasonable).
Unfortunately, a lot of people will use this information to justify claims that Apple is severely undervalued and will see massive short-term increases in stock price. They aren't looking at a 10% rate of return year-over-year as a great thing.
I started accumulating about the time of the OS X Public Beta and stopped buying in the low $300s before the 7-1 split.
Needless to say, it is more than a small part of my retirement portfolio.