Berkshire Hathaway or more aptly Warren Buffets faith in Apple has a lot of investors scratching their heads, as well as calling up their stock brokers trying to get a piece of an investment they did not see; they are hedging their bet on putting blind faith in Warren Buffet which isn’t always a bad bet, but in this case it probably is. Warren Buffet the walking oxymoron or austere billionaire as some call him has been considered one of the United States most informed and safest bets when it comes to predicting the political and economic landscape on longer scale than most. Tech has a huge influence on global policy today.
So why the investment you might be asking yourself ? Apple just had its first down quarter in over a decade, and people are in a panic to frantically sell whatever they got in the company they believe is going down. But if you look at the long game, that is pretty darn good, for your portfolio when you put it into perspective. At the very least if they go up even a little bit that billion dollars is taking big money if it goes up any percentage of the huge base.
Berkshire just put down $1 billion dollars on Apple, but this isn’t even its largest tech holing which is still IBM. Berkshire owns 81 million shares of IBM which comes out to about 8.4% of the outstanding shares. This comes out to a huge $12 billion dollar investment. So the billion on Apple is a walk in the park.
IBM has yet to be a good investment for Buffet to this point. The shares are actually down 8.6% since Buffet made the investment in 2011. That’s a poor showing on such a large investment.
Buffet has never been the biggest fan of tech investments and remained largely out of the picture during the first tech bubble bursting. 10% weighting of public holdings in information technology stocks, which are largely due to big holdings in IBM VeriSign Visa and MasterCard.
So what does Buffet see that no one else does? Apple was a great investment maybe one of the best investments you could make, 30 years ago. Today however, the margins are too small, and if you want to make it big you better be ready to do the research put in the hours and find the next big thing, not the already big thing.
The next big thing in tech by most accounts in tech is the IoT craze or internet of things that is going crazy in popularity among consumers. This may just be a sign of the bubble as well considering that they are laregly frivolous products and if there were a down turn in teh market then they would probably loose favor. However, as it stands now that seems to be the way the market is going either in 2-10 years its the next big thing. That said Apple has yet to announce their pay in this arena. Amazon has already been deep for a year, and Google just followed suit so if they are going to get on it they better do it and do it fast.