{"id":3970,"date":"2024-01-03T18:50:44","date_gmt":"2024-01-03T18:50:44","guid":{"rendered":"https:\/\/economicherald.net\/?p=3970"},"modified":"2024-01-03T18:50:44","modified_gmt":"2024-01-03T18:50:44","slug":"what-to-do-with-apple-and-oil-will-the-2023-heroes-of-mr-buffetts-dish-deliver-again","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=3970","title":{"rendered":"What to do with Apple and Oil: Will the 2023 heroes of Mr Buffett\u2019s dish deliver again?"},"content":{"rendered":"

As a quick reminder to anyone keen on a handy buck, Mnsr Warren Buffett is your textbook all-time successful investor. He\u2019s the brains behind Berkshire Hathaway, one of the largest publicly traded holding companies in the universe, with a market cap of way more than US$600bn.<\/span><\/p>\n

As of 2024, WB remains ensconced within the world\u2019s top 10 richest.<\/span><\/p>\n

We last saw Buffett bidding goodbye to his bud, longtime partner and near enough to centurion dammit, Charlie Munger, who passed just before Christmas.\u00a0<\/span><\/p>\n

Now we find Warren and his shares of Berkshire Hathaway up about +16% for the year after climbing to an all-time high.<\/span><\/p>\n

But the conglomerate that patience built still lagged the S&P500 by a long way last year.<\/span><\/p>\n

As of Friday\u2019s close, the Dow Jones Industrial Average ended about +13.7% ahead \u2013 a new record. The S&P500 index ended the year with a circa +24% gain at 4,769.83, while the tech-heavy Nasdaq Composite Index enjoyed a resurgence, rising 43% to end the year at 15,011.35.<\/span><\/p>\n

The Nasdaq is about -7% off the record high it clocked in late October 2021.<\/span><\/p>\n

All three major US indices rose for nine straight weeks to end the year.<\/span><\/p>\n

Yet, the \u201cOracle of Omaha\u201d has always opined regardless of the solidity of Berkshire\u2019s earnings power and peerless balance sheet might, it still might not beat the market in any given year. <\/span><\/p>\n

Especially last year\u2019s final flurry, which pretty much outperformed Santa.<\/span><\/p>\n

\u201cI recommend the S&P 500 to people,\u201d Buffett said at Berkshire\u2019s annual meeting in 2020. \u201cBerkshire is about as sound as any single investment can be in terms of earning reasonable returns over time. But I would not want to bet my life on whether we beat the S&P 500 over the next 10 years.\u201d<\/p>\n

Shares of the conglomerate reached a record high in September on the back of strong operating earnings as well as billions in returns from its Treasury holdings. Berkshire\u2019s equity portfolio is also wrapping up a solid year with massive returns from Apple.<\/p>\n

Apple\u2019s stock broke its own record again in December to end the year on another high.<\/p>\n

Apple had a minor bump mid-2023 when China\u2019s officialdom snuffed out iPhone sales in a usually reliable market.<\/p>\n

But enter some guile in the form of cost-slashings, big sales across Apple Music and iCloud, as well as some healthy optimism on the back of rate-cut chatter \u2013 Apple\u2019s shares ended 2023 some +52% for the better.<\/p>\n

Context: Now with a market cap of over US$3 trillion, Apple\u2019s worth as much as the entire French stockmarket and more than the entire individual economies of Canada, Australia, and\/or Brazil.<\/p>\n

Just five US companies are valued above a single trillion: Microsoft, Alphabet, Amazon, and Nvidia.<\/p>\n

Apple wasn\u2019t exactly cheap when Tim Cook took charge back in 2011.<\/p>\n

But since then, the stock\u2019s risen 17-fold. The company\u2019s investors must have read the Charlie Munger book of wisdom, then. Buffett\u2019s late right-hand man advocated for buying outstanding companies at reasonable prices \u2013 not decent ones for cheap.<\/p>\n

Case in point: Apple makes up more than half of Berkshire Hathaway\u2019s portfolio, and the deposit has paid off handsomely.<\/p>\n

One challenge to outpace the broader market consistently is the sheer amount of cash Berkshire is working with, making it very difficult for any investments to move the needle. The conglomerate\u2019s cash pile ballooned to a record $157 billion at the end of the third quarter.<\/p>\n

\u201cIf you work with small sums of money, I think there is some chance of a few people that really do bring something to the game,\u201d Buffett said.<\/p>\n

\u201cBut I think it\u2019s very, very hard for anybody to identify them. \u2026It\u2019s certainly gotten tougher with for us with larger funds. And I would make no promise to anybody that we will do better than the S&P 500,\u201d he said.<\/p>\n

Still, Buffett\u2019s long-term track record is unparalleled.<\/p>\n

This last year he managed to top the list of biggest donations in 2023, doling out some 1.5 million shares of Berkshire Hathaway Class \u201cB\u201d stock valued at US$542 million.
\n\u00a0<\/p>\n

The Buffett years<\/h2>\n

Berkshire, which cuts across 40 industries and 60 companies, has doubled the average annual return of the S&P 500 since Buffett first took control back in the LBJ years.<\/p>\n

Berkshire\u2019s compound annual gain was 19.8% from 1965 through 2022, compared with 9.9% for the S&P 500. That\u2019s an overall total return of 3,787,464% vs 24,708% for the benchmark. Heaps of unwitting Berkshire shareholders became millionaires on the back of Buffett\u2019s canny moves and clock-like patience.<\/p>\n

The Buffett USPs<\/strong><\/em><\/p>\n

Another factor that makes Berkshire unique is the alignment between the top boss and its shareholders. Berkshire\u2019s shareholders tend to be long-term investors just like Buffett, using their stock as a savings account.<\/p>\n

\u201cBut what I will promise them is that I\u2019ve got 99% of my money in Berkshire, and most members of my family are \u2014 may not be quite that extreme, but they\u2019re close to it,\u201d Buffett said. \u201cI do care about what happens to Berkshire over the long period about as much as anybody could care about it.\u201d<\/p>\n

With oil prices down more than 15% over the past three months, it might seem strange that Buffett\u2019s doubling down on Occidental Petroleum.
\n\u00a0<\/p>\n

No Occident: Buffett buys big<\/h2>\n

\u00a0<\/p>\n

Via<\/p>\n

Buffett\u2019s bet on Occidental isn\u2019t about just one company. It\u2019s a bet on stable energy markets and US security. It\u2019s exactly the kind of wager he loves to make.<\/p>\n

The shares aren\u2019t having a great year \u2013 they\u2019re down 4% since Jan. 1. But that wouldn\u2019t necessarily be a deterrent for Buffett, since he often says that drops in stock prices should be seen as an opportunity to buy. The Berkshire stake has now grown to almost 28% of the company.<\/p>\n

Buffett also says he likes to bet on the US, and his Occidental wager can be seen as one. The company agreed to buy privately held CrownRock recently for $12 billion for extensive shale acreage in the Permian Basin in West Texas and southeastern New Mexico.<\/p>\n

The revival of the onshore US oil industry has been a huge energy story. The world\u2019s biggest economy is now also its biggest crude producer at around 13 million barrels a day.<\/p>\n

The rise of shale oil helps stabilise the world market. If Islamist rebels attack ships in the Red Sea, or the Organization of the Petroleum Exporting Countries decides to restrict output, US producers can step up.<\/p>\n

To be sure, even though OPEC\u2019s grip on the global market has weakened somewhat \u2013 Angola leaving the bloc is the latest illustration \u2013 it\u2019s still strong. Oil prices can fluctuate a lot within only small changes in supply and demand. With discipline, OPEC will have little trouble putting a floor under prices next year.<\/p>\n

But OPEC is also contending against other factors, too. Energy demand may weaken with the global economy, and the economy itself doesn\u2019t require nearly as much oil as it used to for growth.<\/p>\n

\u00a0<\/p>\n

<\/span><\/p>\n

The post What to do with Apple and Oil: Will the 2023 heroes of Mr Buffett\u2019s dish deliver again?<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

As a quick reminder to anyone keen on a handy buck, Mnsr Warren Buffett is your textbook all-time successful investor. 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