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Buffett Shocks The Market By Ditching AT&T For Apple

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Warren Buffett has made a bold move by selling his AT&T stocks and investing in Apple.

Investing in Apple is a move which has people talking and asking questions such as, “Is this the chance Apple needs to spring back into action?”

 

Trading AT&T for Apple

Warren Buffett, shareholder and CEO of Berkshire Hathaways has made what some have considered a brave move by selling his stocks with AT&T and then investing in stocks worth $1 billion with Apple.

This swap was a calculated step, and the reports confirm that Buffett took his time and waited for the right moment. Business Pandits estimate that this move saved Buffett an estimated $460 million.

There has been plenty of speculation surrounding Buffett’s bold move.

Buffett is not known for investing in technology; neither is he known for taking unnecessary risk.


There is hope that Apple will benefit from a much-needed boost.

Apple’s stock has been in decline for some time, whereas AT&T has remained steady. The reasons for Buffett’s decisions have been a huge source of speculation.

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Why AT&T?

AT&T’s stock has been soaring recently, so why would Buffett sell them?

Buffett has usually avoided technology companies in the past, so his stake in the company was unusual.

However, Buffett’s stake in AT&T was not deliberate.

Berkshire Hathaway had stocks with Direct TV. AT&T merged with Direct TV in July 2015, which effectively gave Buffett a stake in AT&T.

Despite Buffett selling his stock, AT&T is still looking relatively healthy.

 

Why Apple?

Apple’s stock price has been a hot topic this week as their shares have fallen to their lowest in 2 years.

At a time when investors are selling their shares of the company, it has come as a surprise that Buffett is investing instead.

Apple’s stock price has been significantly affected by a decrease in sales growth. Buffett has reportedly stated that he believes that Apple will bounce back from their recent troubles.

One thing is sure; Buffett’s investment has boosted Apple’s stock but is this enough?

buffet ditches att for apple

Can Apple bounce back?

Buffett’s investment in Apple has already turned the heads of investors. Apple managed to start trading on Monday morning with a 2% rise.

Apple has suffered a slump in stocks over the last couple of months which has made their stock price fall to all – time low levels. Last month, Carl Icahn, a high-profile investor, announced that he was selling all of his Apple stock. The selling of shares by high- profile investors served as a major hit to the already struggling company.

Despite Buffett’s investment, Apple still cannot escape falling sales, uncertainty in China, the state of the market, and the lack of consumer/ investors confidence in the upcoming release of the iPhone 7.

Buffett retains great respect in the investment world; his name is not synonymous with taking risks or investing in the uncertain. Buffett’s investment in Apple signals that he has faith in Apple’s recovery.

Apple not the first time that Buffett has giving a company a much-needed boost during times of trouble.

 

Who is Warren Buffett?

Buffett is a well-respected business person and investor, and very popular as one the of the world’s richest men. Buffett primarily deals in insurance, food & beverages, energy, and media industries.

Buffett started his business and investment career at a young age –

  • Made first investment at 11 years old when he bought three shares in Cities Service Preferred
  • Started his first business at 13 years old selling horse racing tip sheets during his paper route
  • Formed the Buffett Partnership in 1956 while in University, the foundation later dissolved in 1969
  • After starting to buy stock in 1960, Buffett was slowly able to secure control of Berkshire Hathaway in 1965
  • Buffett has had success in buying companies which have been undervalued and turning them into a success – this is a skill he has transferred onto his investments
  • Buffett has served as the director of many high profile companies such as Citigroup and Gillett.

How Buffett affects the markets

Warren Buffett’s affect on the market has been a source of many discussions. Warren’s influence is hugely influential to an extent that they have named his influence the ‘Warren Buffett Effect’.

The ‘Warren Buffett Effect’ is the term used to describe how the markets react (either positively or negatively) when Buffett announces whether he is investing or selling stocks in a company.

Buffett has had substantial success in business and investments so many people pay close attention to his investments and look to him to know when to buy and when to sell.

It is not unheard of for investors to buy what he buys and sell what he sells.

 

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