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What Would Happen If Warren Buffett Bailed On Apple And Sold All Of Berkshire Hathaway’s Shares?

What Would Happen If Warren Buffett Bailed On Apple And Sold All Of Berkshire Hathaway's Shares?

What Would Happen If Warren Buffett Bailed On Apple And Sold All Of Berkshire Hathaway’s Shares?

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Apple Inc. (NASDAQ:AAPL), now the world’s second most valuable company, has had a challenging year so far in 2024. The tech giant has lost significant market share in China to domestic rival Huawei, and the U.S. Department of Justice (DOJ) recently filed a sweeping antitrust lawsuit against the iPhone maker, accusing it of creating a monopoly over the smartphone market and engaging in anti-competitive practices. To make matters worse, Apple announced earlier this month that it would lay off 614 employees in California, according to eight reports filed with the California Employment Development Department.

These developments have led some investors to question the stability of their investments in Apple, particularly in light of the fact that Warren Buffett’s Berkshire Hathaway (NYSE:BRK) (NYSE:BRK) sold nearly $2 billion worth of its Apple shares during the 4th quarter of 2023. This begs the question: What would happen if Warren Buffett decided to completely divest Berkshire Hathaway’s stake in Apple?

It’s important to note that there is no indication that Buffett plans to sell any of Berkshire’s Apple shares, let alone all of them. In fact, during the company’s annual shareholders meeting last year, Buffett praised Apple, calling it “a better business than any we own.” However, for the sake of speculation, let’s explore the potential impact of such a move.

As of the latest filings, Berkshire Hathaway owns 905,560,000 shares of Apple, representing a significant portion of the tech company’s 15.44 billion outstanding shares. If Buffett were to sell all of these shares, it could potentially flood the market with excess supply, putting downward pressure on Apple’s stock price.

Given that Apple’s average daily trading volume is around 61.6 million shares, it would take approximately 15 trading days for the market to absorb Berkshire’s entire stake, assuming no other factors influenced the stock’s trading activity. During this hypothetical sell-off, Apple’s shares, which are already down 9.3% year-to-date, could experience further decline.

The psychological impact of Buffett’s complete divestment could also be significant. Many investors look to Buffett as a beacon of long-term, value-oriented investing. If he were to lose faith in Apple, it could shake investor confidence and lead to a broader sell-off in the stock.

However, it’s crucial to remember that Apple is still a fundamentally strong company with a loyal customer base and a history of innovation. Despite the challenges it faces, analysts remain bullish on the stock, with a consensus price target of $196.77, representing a potential 17.51% upside from current levels.

The truth is, no matter how strong a company may be, factors beyond its control – such as market sentiment, regulatory pressures, and competition – can significantly impact its stock price. This underscores the importance of diversification in an investor’s portfolio.

Diversifying Beyond the Stock Market

For investors seeking to mitigate the risks associated with stock market volatility, alternative investments like real estate can provide a valuable diversification opportunity. Platforms like Arrived and Cityfunds offer unique ways to invest in real estate without the need to purchase and manage properties directly.

Arrived allows investors to buy shares of rental properties for as little as $100, providing exposure to the potential appreciation and rental income of the underlying properties. With an average dividend yield of 4.2% and a growing selection of properties across various markets, Arrived offers an attractive option for investors looking to diversify their portfolios.

Click here to see properties available to invest in today with as little as $100

Similarly, Cityfunds provides a way for investors to gain exposure to specific real estate markets through its city-specific funds. For example, you could own shares of a diversified portfolio of home equity investments in Miami, which have already seen a 14.7% increase in value.

There’s also the Cityfunds Yield fund, which targets an 8% annual yield, with a guaranteed 7% floor, by investing in a diversified pool of collateralized real estate loans.

Click here to explore the Cityfunds available to invest in today with as little as $500.

The Bottom Line

While it’s unlikely that Warren Buffett will completely divest Berkshire Hathaway’s stake in Apple, the hypothetical scenario serves as a reminder of the risks inherent in any single stock investment. By diversifying into alternative assets like real estate, investors can potentially reduce their exposure to market volatility and build a more resilient portfolio.

As always, investors should carefully consider their risk tolerance and investment goals before making any decisions. But for those looking to expand their investment horizons, platforms like Arrived and Cityfunds offer compelling opportunities to invest in real estate without the headaches of traditional property ownership.

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© 2024 Benzinga does not provide investment advice. All rights reserved.

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