Buffett bought APPLE share at USD 109 per share and the price came down to USD 93!! What NEXT?

May 21, 16

Buffett bought APPLE share at USD 109 per share and the price came down to USD 93!! What NEXT?

Good Morning to each of you! Our last post has become extremely popular. Many readers felt that I am echoing their feelings of utter depression and they appreciated our approach to solve their issues. Thanks a ton for being my regular reader. Today I am going to talk about BUFFETT investing in APPLE. Let us see the logic.

In quarterly regulatory filing it has been said that BERKSHIRE has bought 98 lakh share at an average price of USD 109. Since then price has come down to USD 93!! 15% fall in just 15 days!!

What is the TECHNICAL ANALYSTS view?

They see APPLE can touch USD 60 to USD 45, if USD 90 level is broken. If they turn out to be RIGHT – what will happen to the value of BUFFETT stake?

He is down by 15% now. At USD 60 he will be down by 45%  and at USD 45 he will be down by 60%!! But will it go down that much? I don’t know.

How will you REACT if this happens with you?

I have a long experience in dealing with NORMAL investors. They can have a various reactions.

1.  If they have bought on their own – they will curse their LUCK.

2.  If somebody has given him FREE ADVISE to buy – he will curse him.

3.  If some paid expert has asked – he would ask him – BEING an expert you don’t know that PRICE Will come down?? Why they hell did you recommend me this stock? He will follow the expert as Market belongs to EXPERT’s father.

In short he will lose his SLEEP for his 100 to 1000 shares!!

Why BERKSHIRE bought this stock?

Frankly, I have no answer. But looking at the finances of APPLE – it appears that APPLE has 2% dividend yield and 10 P/E at BUFFETT purchase price. Now the Dividend yield is 2.44%.

2% dividend yield is double than the USA inflation rate of 1.1%. If you keep CD (Bank fixed deposits in India), you earn just about 1.33% for a year to 2% for a 5 year CD in USA. Since 2003, BUSH has proposed not to charge dividend TAX. For most people, it is ZERO tax on dividends post 2013 in USA. 

At 10X – buying a stock like APPLE makes Real Good Sense. However, the HEDGE FUND Manager of BERKSHIRE who bought this stock can say the real reasons. Buffett has not bought this stock.

What BUFFETT has which NORMAL investors do not have?

Buffett has a VISION of the coming time. He has a PATIENCE to wait till that time comes. He is okay if he is not alive at that time!! Most normal investors are not ready to see beyond 1 year!! Very few can think for 3 – 7 years!! Buffett is thinking for 50 years ahead!!

Secondly, BUFFETT has continuous FUND FLOW. This makes it possible to add at all the price. If he has liked APPLE at USD 109, he will add more at USD 60. Simple. No rocket science.

Normal investor appreciates this strategy – but is not ready to follow. Most guys have continues flow of money for nearly 40 years of his working life. But rarely do they visualize for 5 years or more.

What NEXT?

When you invest in MARKET – anything can happen whether it is BUFFETT or you or anybody. The difference is your STRATEGY, which you decide at the time of purchase. Those who are clear at the time of purchase – they do not face any dilemma of fall in price.

We teach you investing with CALRITY and PURPOSE. When you have these two – you will not get panicked whatever happens in the market.

Just be with us for 3 years and you will bless us for life.

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Live With Passion…Invest With Passion.

Hitesh Parikh.

www.hiteshmparikh.com