Buffett's Past Struggle with Tech Stocks: Insights for Investing in AAPL Today

The early 2000s strengthened Warren Buffett’s brand as one of the best investors of the past many decades. With 39% of Berkshire Hathaway’s portfolio currently allocated to AAPL, Buffet’s team may know something that others don’t.

  • Back in 1999, many criticized Warren Buffett’s investment approach during a red-hot year for tech stocks when Berkshire Hathaway posted losses of 21%.
  • Buffett later had the last laugh as the dot-com bubble burst and the Nasdaq sank by 73% between 2000 and 2002. Berkshire stock was up 30% during the period.
  • Buffett’s track record as an investor speaks for itself. Could Berkshire Hathaway’s large allocation to Apple stock be a good omen for investors in the Cupertino company?

Warren Buffett sitting at a desk in front of a curtain: Figure 1: Buffett's Past Struggle with Tech Stocks: Insights for Investing in AAPL Today Gerard Miller | CNBC

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Figure 1: Buffett’s Past Struggle with Tech Stocks: Insights for Investing in AAPL Today Gerard Miller | CNBC

(Read more from the Apple Maven: Apple Stock: What Happened To Warren Buffett’s Position In 4Q?)


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What’s Wrong, Mr. Oracle?

Recently, the Apple Maven published an article explaining how Warren Buffett’s Berkshire Hathaway changed its position in Apple stock (AAPL) in the December 2022 quarter – spoiler: not much at all.

In researching for that article, I came across a much more interesting one dated December 1999, published by Barron’s. The title was “What’s Wrong, Warren?”, and alluded to the fact that old-school Berkshire Hathaway had lost money during a red-hot year for tech stocks.

Warren Buffett Laughs Last

“Warren Buffett may be losing his magic touch”, prefaced Barron in the opening paragraph, as Berkshire was only days away from posting losses of 21% in 1999. The tech-rich Nasdaq, on the other hand, was on track to deliver gains of over 70% for the same year.

We all probably know what happened next. March 2000 marked “peak tech stocks”, and the infamous popping of the dot-com bubble began to unfold.

Compared to the rest of the stock market, the early 2000s were magical for Warren Buffet and team. While Berkshire stock climbed a respectable 30% between 2000 and the end of 2002, the Nasdaq sank by a whopping 73%.

Jinxed by Barron’s in 1999 and so many other publications of the time, tech investors lost their shirts. Fully clothed next to them stood Warren Buffett, having the last laugh.

Apple And Buffett: Lessons Learned

I find the story above fascinating for its entertainment value. But there are probably lessons to be learned here as well, including one or two that pertain to Apple stock.

  1. Warren Buffett is considered one of the best investors of the last century for good reasons. What was wrong with him, back in the 1990s, was his reluctance to invest in the tech bubble. In investing, track record matters, and talent surfaces when the time is right.
  2. For the past ten-plus quarters, 38% or more of Berkshire Hathaway’s portfolio has been allocated to AAPL. While many may have considered the allocation strategy irresponsible for its concentration into a single stock, the approach has paid off so far. Apple stock has been up 27% per year since 2020 vs. the S&P 500’s 10% annual gains. Maybe, once again, Warren Buffett and his team know something that many of us don’t, and AAPL might be worth owning heavily at current levels.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. The article may contain affiliate links, but these partnerships do not influence editorial content. The author may use AI tools, including OpenAI’s ChatGPT, to create some of the article’s content, particularly summaries. Thanks for supporting the Apple Maven.)

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