Finimize - 🍏 Buffett ditched Apple

What’s going on here?

Just before markets started to tumble, Warren Buffett had a serious spring clean.

What does this mean?

Warren Buffett’s cash pile just got a whole lot bigger, as Berkshire Hathaway cut its Apple stake by almost 50% in the second quarter. Although, that’s not necessarily personal: Apple is still Berkshire’s biggest holding, and Buffett’s conglomerate has been offloading stocks for the last seven consecutive quarters. In fact, Berkshire shed $90 billion in stocks in the first half of this year, with $75 billion of that being cut loose in the last quarter alone. So it’s not just Apple in the crosshairs: the firm also trimmed nearly 9% of its stake in Bank of America, its second-biggest holding, since mid-July.

Why should I care?

Zooming out: Timing is everything.

Buffett timed his trades well: the all-star investor was selling shares while the S&P 500 hit a record high in mid-July. Now, there’s no telling exactly what Buffett’s thinking – but the sale could suggest that he’s pessimistic about the world’s stock markets or believes AI initiatives have challenged Apple’s supremacy. And if he expects a changed climate to reshuffle the winners and losers, it wouldn’t hurt to have more cash on hand.

The bigger picture: In… and out.

Buffett’s sale might’ve given you a flutter in your stomach, especially with stock markets wobbling this week. But remember, you can’t trust one investor to shape your view – and even the Oracle’s trades don’t necessarily reflect his personal outlook. One thing’s clear though: Buffett’s not afraid to hold cash. So if you’re unsure where to place your bets, you could do the same and lock in risk-free returns. And because banks usually slash rates on savings accounts before a rate cut, now could be the right time to lock in rates for longer-term cash deposits.

What’s going on here?

Japan’s Nikkei 225 tumbled 12.4% on Monday, the index’s worst day since the “Black Monday” of 1987.

What does this mean?

Japan’s benchmark indexes, the Topix and the Nikkei 225, have fallen more than 20% from their all-time highs on July 11th – that’s what some call a bear market. Meanwhile, the Japanese yen strengthened to its highest level against the dollar since January, rallying around 13% from its lows last month. So companies that sell a lot of stuff abroad have been hit pretty hard in the sell-off, as their profits are weakened by the stronger yen.

Why should I care?

For markets: We’re all in this together, Buffett.

Borrowing yen to invest in currencies and assets that offer higher returns has been popular with investors. Even Warren Buffett borrowed to help pay for his investments in Japanese trading companies. But when the yen picked up, some investors scrambled to buy the currency and sell stocks to unwind their positions – and that evacuation pushed Japan’s stock market down low, and fast. Even the legendary investor has been burned, with those five trading firms falling more than 15% on Monday.

The bigger picture: This is a test of self-restraint.

Now it’s true, investors could steal a deal by buying stocks during heavy sell-offs. As Buffett says, “Be greedy when others are fearful”. But that’s a seriously risky play: timing your purchase can be impossible when investors are panicking and markets are in freefall – it’s sometimes referred to as catching a falling knife. So while it’s not very Wolf of Wall Street, dollar-cost averaging – investing a fixed amount on a regular basis, regardless of share price – would be a less volatile way to build stakes while prices are low.