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Berkshire Hathaway (BRK.B) has dropped 50% on multiple occasions says Warren Buffett, responding...

Berkshire Hathaway (BRK.B) has dropped 50% on multiple occasions says Warren Buffett, responding on CNBC to a question about Apple (AAPL). "You can't run a business to make the stock price go up every day," he says, though allowing Apple may have too much cash. Update at 9:07: Expanded comments from Buffett on Apple this morning.
Comments (19)
  • Berkshire Hathaway has a performance of + 1,873,887% in 51 years that means 21.39% per year !!! what's the problem ?
    abauer6000@gmail.com
    4 Mar 2013, 07:49 AM Reply Like
  • Bauer, may be i misunderstood but i think warren buffet was simply saying that berkshire has been in a similar situation where berkshire stock dropped by 50% and yet it came back up. Therefore i believe he is saying that the fact that apple stocks dropped as much as it has is not an indication that apple will not recover and continue going up in the future.
    4 Mar 2013, 08:02 AM Reply Like
  • However he isn't saying that they will recover.

     

    He's also repeating his point that managements job is to run the business, not manipulate the stock price.
    4 Mar 2013, 08:34 AM Reply Like
  • It's said that the late Steve Jobs is not good at manipulating the stock price. Then we have some other people who is not good at anything except that. Case in point: the Sears CEO.
    4 Mar 2013, 09:19 AM Reply Like
  • Where was this taken from?
    4 Mar 2013, 08:40 AM Reply Like
  • CNBC interview earlier today.
    4 Mar 2013, 09:04 AM Reply Like
  • So is he saying Apple is going to drop 50%? He is the oracle.
    4 Mar 2013, 09:02 AM Reply Like
  • Another moment of sanity from Warren Buffet.

     

    Apple's management team knows what it's doing.

     

    I'm staying long AAPL.
    4 Mar 2013, 09:06 AM Reply Like
  • At PE of 9.76, how low does it have to go? Exxon has a PE of 9.22. (AAPL) is now about as cheap as (XOM). But if you look at forward PE, (AAPL) is cheaper than (XOM).

     

    How about that: a tech giant is cheaper than an oil giant.
    4 Mar 2013, 09:23 AM Reply Like
  • Number one, what an offensive Buffett comment, as how many people can have their investments drop 50% and still sleep at night or even stay in them? Buffett's dumb comments were spoken by a guy able to lose lots of money and still be stinking rich. How many of us have those deep pockets so we can laugh when our holdings drop 50%? Very few. Also, he should talk about Apple having too much cash, as BRK has over $75B and hoards it all as it pays no dividend. Not one cent.

     

    Why people still follow this guy is a puzzle, as the best years of BRK are well behind it.
    4 Mar 2013, 10:09 AM Reply Like
  • @bobbobwhite

     

    "[...] how many people can have their investments drop 50% and still sleep at night or even stay in them?"

     

    If you loose 50% of an investment and that makes you loose sleep at night then maybe you should look at not investing in such investment types. Maybe the less volatile 3% yearly movement is more your thing!

     

    And besides, anyone who was to loose 50%, regardless if it's $5000 or $5 billion... it's STILL 50% and that's bad!!
    4 Mar 2013, 10:20 AM Reply Like
  • What a silly comment bobbobwhite.

     

    1. So, in the market "crash" of 2008-2009, were you one of the sheep who sold everything at the bottom? Hopefully not. Buffet is looking back over a 50 year investing career. Over a period of time like that there are going to be financial panics that cause price dislocations, and stocks WILL have huge corrections. If you can't sleep at night with that, you don't have enough cash outside of the market or you are invested incorrectly. Or, you are one of those people who is "long" in one month, and "short" the next.

     

    2. BRK continues to perform great, and is a very solid stable holding - almost like a mutual fund without the fee.

     

    3. 50% is 50% - it has nothing to do with "still being rich." And, I doubt Buffet laughs when his stock goes down 50% - this is someone who has shown himself committed to increasing shareholder value over the long term.
    4 Mar 2013, 12:24 PM Reply Like
  • What he is saying is that he didn't sell his stock even though there were times when his stock lost 50% and he didn't panic and sell. That is why he is so stinking rich.
    4 Mar 2013, 12:34 PM Reply Like
  • If BH buys AAPL Shares it means something. If he makes some abstract comment ................ AAPL isn't his type of stock but he does know that the best investments are great companies with terrible stocks.......... We shall see.
    4 Mar 2013, 10:13 AM Reply Like
  • I thought Buffett's comments were clear as the nose on your face, and needed no "interpretation".

     

    Anyone that didn't understand is being obtuse, purposely or otherwise.
    4 Mar 2013, 10:46 AM Reply Like
  • Considering Buffett's comment that Apple management such not attempt to influence stock price; I believe (in this case) that he is wrong. By simply in acting a large stock buyback with foreign allocated funds, two good thing could happen for the company. 1. The company could in effect use non-US taxed funds to reduce the number of stocks outstanding.
    2. Obtain a better return on their cash position by not having to pay a dividend on the reclaimed stocks out of their American taxed cash position.
    Then with a stock split (would resulting a larger number of potential buyer of the stock), they would be influencing the stock in a positive way which would also be in Apple's best interest.
    All positive for the company & Apple stockholders
    4 Mar 2013, 11:19 AM Reply Like
  • I believe Buffet is referring to the 50% premium in the buyout of Heinz.
    4 Mar 2013, 11:21 AM Reply Like
  • i think WB is simply saying, a company can perform very well and yet there are times the stock price may sell-off by 40%, it happened to his company and it's now happening to Apple, strong performers will bounce back.
    technical considerations can make a stock sell-of, but if that company continues to make loads of cash the stock will recover and that's what will also happen to Apple.
    maybe WB is hinting that he may come in and buy some Apple stock who knows ? he picked up Bank of America at 6 $ when the stock got slaughtered and saw it double.
    so why not put 15 bio$ in Apple, that will give him a 4 % holding and a seat on their board, he will then advise them how to spent their 130 $ bio cash, by buying more of their own shares, WB in a win, win situation.
    4 Mar 2013, 05:53 PM Reply Like
  • Discloser: I am long AAPL, and have also sold uncovered puts.

     

    Indeed, when Warren Buffet speaks, the world, and especially the financial world listens.

     

    Here is my humble interpretation of Warren Buffet's comments on AAPL:

     

    --Buffet seems to be advocating holding a stock long term. He likes to hold many stocks in Berkashaire Hathaway for ever!

     

    --But the above approach may not be suitable for all investors. In my case I am maintaing 20% (mental) trailing stop based on the previous closing high. If the stock drops to or below the trailing stop, I would sell the stock at market on the openig the next day.

     

    --In case of the uncovered put that I have written, I am maintaining 20% stop from the cost basis. Cost basis is the strike price of the uncovered put sold minus the premium received.

     

    --Not necessarily the stock of AAPL will drop by 50% from its all time high of 705 reached in September 2012.

     

    --Of course not all stocks are alike. Comparing Berkshire Hathaway shares with AAPL will be like comparing oranges and apples (no pun intended)!
    4 Mar 2013, 10:25 PM Reply Like
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