Yahoo Finance If You Invested in Apple When Warren Buffett Did, Here’s How Much You Would Have Made
Warren Buffett, the billionaire known as the “Oracle of Omaha” and one of our Top 100 Money Experts, is one of the most famous investors in the world. As CEO of Berkshire Hathaway, he powered that company’s stock to an incredible 19.8% average annual return from 1965 through 2022, an unbelievable span of 47 years.
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During that span, the S&P 500 averaged just 9.9% annually, meaning Buffett and Berkshire more than doubled that return over nearly half a century. For this reason — and the fact that Buffett is a very quotable public figure — investors flock to the handful of stocks that he selects for the Berkshire portfolio. One of the most noteworthy in recent years has been Buffett’s investment in Apple, which now comprises a whopping 42.5% of Berkshire’s entire portfolio.
So it begs the question: If you had played along with Buffett and invested when he did, how would your returns have looked? Let’s dig in.
Big News: Buffett Invests in Apple
Buffett made waves in the investment world when Berkshire first bought Apple stock in Q1 2016, and then continued and even accelerated his buying throughout 2016 and into 2017. Buffett had long been known for not investing in technology stocks because by his own admission he didn’t really understand them, and he only invests in things he knows.
But the famed investor is equally well known for buying good companies at a fair price, and Apple certainly fit the bill. Now, Apple is by far Berkshire’s biggest holding, comprising nearly half of its entire investment portfolio, with a valuation of over $158 billion. That amounts to 5.9% of all of the Apple shares that even exist.
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How Much You Could Have Earned Investing in Apple When Buffett Did
Buffett began buying Apple in the first quarter of 2016, but there’s no way to know exactly what his average share price was. But if you use the highest closing that quarter as a conservative estimate, it means that you would have paid $27.06 per share for Apple.
On Mar. 4, 2024, Apple shares closed at $175.10. This means you would have earned a profit of $148.04 per share on your investment, or 547%. Here’s what that translates to in terms of dollars and cents based on different starting investment amounts:
$100 invested would be worth $647
$500 invested would be worth $3,235
$1,000 invested would be worth $6,470
$5,000 invested would be worth $32,350
$10,000 invested would be worth $64,700
$100,000 invested would be worth $647,000
$39.2 million invested — the amount of Buffett’s Q1 2016 purchase — would be worth $263.6 million
What’s Buffett’s Secret for Investment Success?
Buffett is a legendary stock picker, and that has gone a long way toward his impressive record of lifelong investment success. But you can apply some of his most basic principles to improve your own portfolio.
First and foremost, Buffett only invests in businesses he understands. If you’re going to be a stock picker like Buffett, you have to do your homework. If not, he recommends that you simply buy an S&P 500 index fund instead.
Buffett is also famous for saying that his preferred holding period for a stock is “forever.” In other words, Buffett says that investing is a long-term endeavor, so you should avoid trading.
As a value investor, Buffett also restricts his investments to those that are a value. When he bought Apple for the first time, for example, it was trading at just 11x earnings, vs closer to 28x as of Mar. 4.
Additionally, Buffett only wants to invest in companies that have a “moat,” or a protective barrier around them that makes it harder for others to compete against it.
Lastly, to succeed in investing, you’ll have to leave your emotions at the door. You’ll have to buy when things look ugly, and sell when they look too good. As Buffett puts it, you want to “be fearful when others are greedy, and greedy when others are fearful.”
Put it all together, and Buffett’s investment philosophy might help guide you to your own successes.
Will Buffett Keep Buying Apple?
At the 2023 Berkshire Hathaway annual meeting, Buffett told shareholders that Apple was “a better business than any we own.” He also stated that he would keep buying it as much as he could, going so far as to tell CNBC’s Becky Quick in 2018 that he would love to own 100% of the company. Of course, there are financial and practical reasons why Buffett won’t likely continue to buy huge chunks of Apple.
First, as he told Quick, his ownership automatically goes up every year simply due to the fact that Apple buys back so much of his stock. That reduces the number of shares in existence and increases Berkshire’s percentage ownership of the company.
Second, Apple is already nearly half the value of Berkshire’s entire portfolio, at a whopping $158 billion. To meaningfully increase his stake, Buffett would have to pony up a sizable amount of money. But rest assured, if there’s a market crash and/or Apple shares fall to ridiculously cheap levels once again, Buffett will likely step up and buy even more, based on his overall investment philosophy.
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This article originally appeared on GOBankingRates.com: If You Invested in Apple When Warren Buffett Did, Here’s How Much You Would Have Made
