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Warren Buffett Buys $1 Billion Stake In Apple (cnn.com)
An anonymous reader quotes a report from CNN: Berkshire Hathaway, the conglomerate run by Buffett, disclosed in a regulatory filing Monday that it purchased more than 9.8 million shares in Apple during the first quarter. It marks Berkshire's first investment in Apple. Berkshire acquired its position at an average price of about $109 a share. Apple's stock price has since fallen to just above $90, meaning that Berkshire's stake in Apple is now worth about $888 million. The Apple purchase is the second big tech investment by Berkshire, which has been steadily adding to its stake in IBM during the past few years. Until recently, Buffett had been famous for his lack of investments in the tech sector. But Apple fits perfectly in Buffett's wheelhouse. The company is a leader in its market and the stock is extremely cheap, trading for just 11 times this year's earnings estimates. Apple also has a pristine balance sheet, with $232.9 billion in cash. At the end of April, billionaire investor Carl Icahn sold his entire stake in Apple, citing the risk of China's influence on the stock. Last week, Didi, China's ride-sharing service and rival to Uber, announced Apple invested $1 billion in the company. There's been a lot of money shuffling taking place as of late as Apple tries to reinvigorate the market after it had its first earnings decline in more than a decade.
Still stuck to my "never an individual stock. Always funds. Always index funds".
Nothing wrong with that. You might leave some money on the table (or not) but you should stick with an investment strategy that fits your appetite for risk. Index funds are fine investment vehicle. Don't apologize for using them.
Personally I haven't purchased AAPL for a different reason. Three reasons actually. First the stock is already quite valuable so the chance for it to double is not as high as with some other companies. Yes the PE is still reasonable but that is predicated on profits remaining where they are which is to say VERY high. Second, the dividend yield on AAPL isn't amazing, currently at about 2.4%. While that's not bad it isn't better than inflation so I'd still be depending on stock growth to make any money. Compare with companies like Royal Dutch Shell which pay 7-8% dividend yield and are less subject to consumer whims. Third and probably most important, Apple's product strategy is kind of a high wire act. All it would take for the stock price to crater would be a single bad iPhone. While Apple has a great track record, they aren't free from screwups. Apple's stock price remaining high will depend on them introducing another hit product in the next 5-10 years. Unclear if they will be able to pull that off without their visionary leader.
For a tech stock I think AAPL isn't a terrible investment but I think AMZN has more upside potential as a stock if you want to play in that sector and are thinking a few years down the road.