Warren Buffett’s recent decision to offload Apple and Bank of America stock could pay off in the long run. Berkshire Hathaway sold nearly half its stake in Apple, its largest position by a wide margin, and trimmed its Bank of America stake. Buffett’s moves may be signaling that these investments were no longer aligned with his value-investing philosophy.
Buffett once said, “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” He first bought Apple in 2016, but sold some shares this year, possibly due to changes in the US tax code. The Oracle of Omaha may be looking to take profits off the table and avoid higher taxes on his capital gains if the tax code changes.
The recent sale could also be influenced by uncertainty surrounding the upcoming presidential election. Polls suggest a close race between Kamala Harris and Donald Trump, making it difficult to predict the outcome. Additionally, interest rates are uncertain, with some economists predicting rate cuts from the Federal Reserve.
Buffett’s decision to hold $237.6 billion in US Treasury Bills on Berkshire’s balance sheet as of June 30 is also prudent. This move allows him to generate passive income while avoiding the uncertainty surrounding Apple and Bank of America stocks.
In any scenario, Buffett has proven himself a skilled investor who can make money regardless of market conditions. His decision to hold cash and Treasury Bills will likely prove wise in the long run.
Source: https://finance.yahoo.com/news/prediction-buffetts-decision-offload-apple-115500610.html