Warren Buffett is selling Apple stock, Apple is gone?

Wealthy and chivalrous

2024-05-12 11:44Posted in Guangdong Finance and Economics Creator

In May 2024, Warren Buffett, a 93-year-old stock god, told investors at a shareholder meeting that he was reducing his holdings in Apple's stock. Although Warren Buffett has repeatedly praised Apple as a good company, reducing his holdings in Apple stock still attracts huge attention in the market.

Image source: Internet

So, is Apple dying?

Recently, Yahoo Finance has an article analyzing Warren Buffett's reduction in Apple, and I would like to share with you:

Since Berkshire Hathaway bought Apple in 2014, Buffett's team has become almost synonymous with Apple. Warren Buffett's investment, judging by the results so far, is definitely smart and has brought significant profits to Berkshire.

However, while Buffett has been expressing confidence in Apple's business, he has begun to sell Apple shares. At one point, Apple accounted for more than half of Berkshire's portfolio, but now it's back below 40%.

So, why does the stock god express his love for Apple while reducing his stake in Apple?

The answer is most likely "taxes"!

In the United States, if an investor holds a stock for more than a year, any profits they earn will be taxed at the long-term capital gains tax rate. For individual investors, it can be up to 20%, depending on your income. For businesses, it's 21%. This means that for every $1 Berkshire Hathaway makes in profits from Apple stock, $0.21 goes to the U.S. government.

At Berkshire Hathaway's 2024 annual meeting, Buffett mentioned that they don't mind paying taxes, but it sees ominous signs. Warren Buffett said it was 35 percent a few days ago, and it was as high as 52 percent early in his career. Given the current political environment, he believes that these taxes will not decrease and will most likely increase.

Biden called for an increase in the corporate income tax rate to 28% in his recent State of the Union address, so Buffett's assessment seems correct. Berkshire is moving to capture some of these gains before being forced to pay higher taxes.

However, many investors in the comment section put forward different views:

The man, Panda Bear, said that Buffett almost never says the real reason why he buys and sells things, which is their trade secret. I think he's just cutting because he thinks Apple's competitive advantage is overrated.

Apple's products and services are good, but they are not major players in the tech space like Microsoft and Google, or even Meta in advertising, the Nick said. The business they are in has reached a mature stage, it is no longer a growth company, so the stock will stabilize. Sales are either stable or slightly down. Berkshire Hathaway may want to allocate some of its capital to growth stocks. If I had to name a reason, I would use a stop loss, not a blind investment.

So why do you think Buffett is selling Apple shares, and everyone is welcome to comment.

Risk Warning: Investment is risky, and you need to be cautious when entering the market

Wealthy and chivalrous

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Personal opinion, for reference only