Monday Market Rundown: Buffett's Big Sell Off - August 5th to August 9th, 2024

Earnings Reports:

Mon: Sumitomo Mitsui Financial Group (SMFG), CSX Corporation (CSX), Palantir Technologies (PLTR), Williams Companies (WMB), Realty Income Corporation (O), Tyson Foods (TNS).

Tues: Amgen Inc (AMGN), Caterpillar (CAT), Uber Technologies (UBER), Airbnb (ABNB), Duke Energy Corporation (DUK), Super Micro Computer (SMCI).

Wed: Novo Nordisk A/S (NVO), Walt Disney Company (DIS), McKesson Corporation (MCK), Equinix (EQIX), CVS Health (CVS), Shopify Inc (SHOP), Energy Transfer L.P. (ET), Monster Beverage Corporation (MNST), Occidental Petroleum Corporation (OXY), Hilton Worldwide Holdings (HLT).

Thurs: Eli Lilly and Company (LLY), Alibaba Group Holding Limited (BABA), Brookfield Corporation (BN), Datadog (DDOG), Take-Two Interactive Software.

Fri: Evergy Inc (EVRG), Legend Biotech (LEGN), Hawaiian Electric Industries (HE), Getty Images Holdings (GETY).?

Economic Calendar:

Mon: Services PMI , ISM Non-Manufacturing Employment, ISM Non-Manufacturing PMI, ISM Non-Manufacturing Prices, FOMC Member Daly Speaks.

Tues: Exports/Imports, Trade Balance.

Wed: Consumer Credit

Thurs: Crude Oil Inventories, Continuing Jobless Claims, Initial Jobless Claims, 30-Year Bond Auction, Fed’s Balance Sheet.?

Fri: U.S. Baker Hughes Total Oil Rig Count.

Weekly Spotlight - Buffet’s Big Sell Off

Warren Buffett is arguably the most successful investor of the 20th century. Nicknamed the “Oracle of Omaha”, Buffett kick started his professional career in 1965 when he took majority control of the textile then manufacturer Berkshire Hathaway Inc., turning it into his primary investment vehicle.?

From when he bought it, all the way through the 90s he was able to average 11 percent annual returns from “value investing”, or buying stocks that appear to be undervalued compared to their “intrinsic” value. This gave Buffett and his company Berkshire Hathaway a war chest of cash that allowed him to invest heavily in companies such as Apple, Bank of America, American Express, Chevron, Occidental Petroleum, and famously Coca-Cola.?

Through these stocks as well as a series of other acquisitions and start-ups, Buffett guided Berkshire Hathaway to a value topping over 900 billion dollars, and his personal wealth well over 60 billion.?

What gives Warren Buffett so much credibility as an investor isn’t just his ability to pick great companies that end up performing well, but doing so over the span of nearly 60 years. Overseeing billions of dollars over multiple economic catastrophes and stock market crashes shows how it's not just luck, and when he speaks, everyone should listen.?

This is the exact story that is beginning to play out as Warren Buffett announced on Saturday August 3rd, that his company Berkshire Hathaway will be selling nearly 50% of its Apple stock position which is said to be valued at $84.2 billion.?

This isn’t the first time that Berkshire has cut its stake in Apple. In the fourth quarter of 2023 it sold 1% of its position equalling 10 million shares and again in the first quarter of 2024, it sold 13%. After its sale of Apple and several other companies including Bank of America, Berkshire now has a cash stock-pile of $277 billion, up from $189 billion in the first quarter of this year.?

The reason that Berkshire, under the guidance of Buffett, would want to dumb significant positions in some of its longest held stocks takes a bit of speculation. Due to recent market success, Apple has seen new all time highs and continues to hold its spot as the largest company in the world. However from an investment management standpoint this leaves Berkshire Hathaway with a large concentration of its portfolio in one single stock. The reason for the sell off doesn’t need to be overly complicated. Buffett has long preached diversification and selling large positions while they are at all time highs in order to open new positions or increase smaller ones is never a bad idea.?

When asked what Buffett plans to do with Berkshire’s cash stockpile he had this to say “I think it’s a fair assumption that [cash holdings] will probably be about $200 billion at the end of this quarter,” the investment icon said at the time. “We’d love to spend it, but we won’t spend it unless we think [a business is] doing something that has very little risk and can make us a lot of money … it isn’t like I’ve got a hunger strike or something like that going on. It’s just that … things aren’t attractive.”.

Warren Buffett shouldn’t be treated as the gospel, but he is still the closest thing to it. He can be wrong about markets in the short term, just as anyone can. However, given his long history of overwhelming success, it can lead investors to give things happening in the market, especially Apple a quick second look.?