As Aunt Tera told me many times, “If everyone is out to get you, then a little paranoia is a good attitude to have. There are times when you have to scratch the surface so you can see more clearly what is inside. Take the stock market. Please.
Apple has been on a roll in recent months. Rolling downhill with seeming abandon while stock market watchers continue to pile up misinformation about Apple and APPL with as much abandon. What’s the penalty for losing money in the stock market?
So, how is it that Warren Buffetts Berkshire Hathaway lost $19-billion on Apple stock in the last three months? The same way that Apple lost over $450-billion in the past few months.
Fiction as in, “It didn’t happen.” Apple didn’t lose a dime in the stock market. APPL did. The two are not the same. Apple’s revised guidance on last quarter’s earnings may have sent the stock market into a free fall, but Apple is not wholly responsible for APPL.
Who is APPL’s biggest investor? Berkshire Hathaway. Warren Buffett’s company. Alexis Christoforous said:
Warren Buffett’s big bet on Apple may not be paying off. Berkshire Hathaway’s investment in the tech giant has lost $19B in the last 3 months alone.
The only way Berkshire Hathaway would lose money on APPL is if it sold APPL stock it owned already. At a loss. Instead of selling stock at a loss, Buffett’s company bought more Apple Stock because many shrewd investors– and can we agree that anyone worth a few billion dollars is a more shrewd investor than a pretty face on Yahoo! Finance TV?– buy low and sell high.
Here’s the deal in plain language.
You’ll lose money if you buy high and sell low; but buying and sitting while a stock goes down in value is not necessarily a loss. Yet. Likewise, if you buy low and do not sell, even if a stock has tripled in value, you haven’t made money. Yet.
You gotta sell it to lose money or make money.
Otherwise, whatever stock you bought and hold– that has gone up or down in value since the purchase– isn’t a loss. Shrewd investors know that and seem to understand it far better than talking heads like Julia La Roche on Yahoo! Finance TV.
From what I can see of the stock market and investors in general, the shrewd ones buy into well run companies with good profits and market dominance, while the dumb investors listen to the pretty talking heads on TV and sell, sell, sell when the financials do not match the sentiment.