If you follow financial media at all, there’s a popular type of article that you’ll often see: “Warren Buffett just bought tons of XYZ stock” or “Warren Buffett just sold off his entire stake in ABC company.”
While these articles get lots of attention, they’re usually nothing but fluff because most traders aren’t trading with the same scale, goals or timeframe as Warren Buffett.
Not only does Uncle Warren have A LOT more money than the average trader, he’s trading on a whole different level — and often doing things “behind the scenes” that amount to more than just buying and holding.
Let’s look at a couple of examples.
Back in 2020, a big deal was made when news outlets, after inspecting Buffett’s latest 13F filing, found that he “changed his tune” on gold. (He is famously anti-gold.)
Turns out Buffett had invested nearly $600,000,000 — that’s $600 million — in gold miner Barrick Gold, stock ticker GOLD… not in gold directly.
Now, let’s ignore the fact that gold and gold miners are not the same thing.
Let’s also ignore the fact that while $600,000,000 could set a normal Joe up for several lifetimes, it’s literally less than a drop in the bucket to Warren Buffett.
Let’s just look at that investment, which he made in mid-2020.
The following chart shows the performance of GOLD from around the time Buffet bought to the present. A red box highlights approximately where Buffett would have gotten in.
As anyone can see, GOLD hasn’t risen more than about 10% since he made the investment. And since it peaked, it’s come down quite a bit — as much as 30 or 40%.
For any regular trader who followed the mainstream headlines, they might have invested near the top and — even with today’s surging gold prices — haven’t come anywhere near recouping their investment… even if you count dividends.
Or take Apple (AAPL) stock.
Earlier this year, the news made a huge deal of the fact that Buffett was selling AAPL stock hand over fist.
His company, Berkshire-Hathaway, sold off $21 billion worth of AAPL stock in the first quarter 2024 — this after having already sold more than $1.5 billion in the last quarter of 2023.
To add to the intrigue, AAPL stock was by far Berkshire-Hathaway’s biggest holding, making up over 50% of the entire portfolio.
“Is Buffett bearish on AAPL?” the headlines read.
Anyone following the surface mainstream narrative might have gone out and sold all their AAPL shares.
And the fact that Apple had been experiencing a little turbulence after being the first company to hit the $3 trillion market cap mark back in July 2023 certainly didn’t help.
After hitting that milestone, the stock ran into some trouble, bumping its head more than once on an invisible $200-per-share glass ceiling for nearly a year, from July 2023 to June 2024.
It wasn’t until a month ago — June 11 — that AAPL definitively broke through the $200 per share mark and quickly raced higher, taking back the crown of the most valuable company in the world and also becoming the first in the world to reach a $3.5 trillion market cap.
Even with today’s sell-off in the broad market, it currently sits above 228.
So why is Uncle Warren so rich if he’s just going around making foolish trades?
For that, we refer back to the beginning of this article where we pointed out that Buffett has a whole different set of problems than traders like us — so Buffett can’t trade like us nor should we try to trade like him.
In the case of the GOLD buy, it’s possible that Buffett bought the stock simply for the dividend. Maybe he’s selling covered calls against the stock. Or maybe he has some other trick up his sleeve — we simply don’t know.
Or in the case of the AAPL sale, Warren himself later said that Berkshire was taking advantage of historically low tax rates to sell.
So, before you blindly follow Uncle Warren’s trades — or any mainstream name, for that matter — remember that their goals, scale, and strategies are vastly different from the average trader.
— The Prosperity Pub Team
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