Here’s Why Warren Buffett and Berkshire Hathaway May Change Their Investing Strategy With Donald Trump as President

Buffett is a longtime value investor. At their core, value investors buy a stock that is undervalued, then sell it when it achieves full valuation. When Buffett and Berkshire first bought Apple stock, it traded for about 10.6 times trailing earnings.

That was a cheap price for a company making a product millions of people utilize. However, Apple now trades at 39 times earnings, far above its historical average.

Now, 39 times earnings can be a price tag worth paying if the business is growing rapidly. However, that’s far from what Apple is doing.

Since 2023, Apple’s revenue and earnings per share are little changed.

Yet the stock price has significantly risen since the start of 2023. These two things don’t add up and lead me to believe that Apple’s stock is significantly overvalued. Buffett and his team have access to the same information and likely believe the same thing. As a result, they’re selling the stock.

We’ll have confirmation on this thesis after Berkshire’s fourth-quarter trades are released, as a significant decrease in its Apple stock holdings would indicate that it’s not related to taxes but valuation. I’m confident that these sales will continue, and investors holding Apple stock now might think about selling some, as Apple’s business hasn’t grown very much for the past two years, and a correction may be imminent.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $363,671!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $45,954!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $486,533!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 2, 2024

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Here’s Why Warren Buffett and Berkshire Hathaway May Change Their Investing Strategy With Donald Trump as President was originally published by The Motley Fool