Among Warren Buffett's impressive track record are failed investments and missed opportunities, the most recent being Donald Trump's victory in the U.S. presidential election.
Whenever legendary investor Warren Buffett takes action, Wall Street pays close attention. Since taking the CEO position at Berkshire Hathaway in the mid-1960s, he has witnessed the total return rate of Berkshire Class A shares reach over 5,580,000%.
The average annual return of Berkshire stock nearly double that of the S&P 500 will certainly attract investor attention. This is why many people always look forward to the day Berkshire's 13F filings are made public, detailing the stock buy and sell transactions conducted by Buffett and his associates.
However, even the most successful asset managers can make mistakes. Among Buffett's impressive track record are failed investments and missed opportunities. For example, he 'missed' billions of dollars with investments in Walt Disney, Paramount Global, or selling shares in Wells Fargo and suffering a loss of $444 million with the Tesco grocery chain.
While Buffett's list of successful investments is lengthy, the recent U.S. presidential election results indicate that one of his forecasts was inaccurate. As a result, the billionaire lost a significant amount of money.
The victory of President-elect Donald Trump changed the dynamics of the stock market. On November 6, after news outlets reported that Trump was about to return to the White House, all three major indices on Wall Street surged.
Despite the ongoing rally, some questions remain unanswered. For example, Wall Street will question whether Trump's administration can effectively address the U.S. national debt issue. This is not an urgent problem for the stock market and the U.S. economy, but the federal budget deficit also needs to be addressed soon.
Additionally, the market is also concerned about Trump's proposal to impose tariffs on imported goods to the U.S. He has mentioned imposing a 60% tariff on goods imported from China and up to 20% on all other countries.
In theory, tariffs would improve the price competitiveness of U.S.-made goods and reduce the federal trade deficit. However, this measure could also result in higher prices for consumers and businesses and affect U.S. relations with other countries.
Overall, one thing is certain about Trump's term: the increase in corporate income tax will definitely not be put up for discussion. The Tax Cuts and Jobs Act, signed into law during his first term as president, permanently reduced the corporate income tax rate from 35% to 21%.
As many of the largest and most influential companies in America benefit from the lowest tax rates in 80 years, Warren Buffett's recent forecast was inaccurate. In a shareholder meeting last May, the billionaire stated that corporate taxes would rise in the future. Therefore, he believed that Berkshire taking profits from Apple at that advantageous tax rate at the time would benefit investors.
Contrary to Buffett's forecast, corporate taxes will not increase for at least the next four years. Meanwhile, Apple's stock has risen quite strongly, even though Berkshire has been selling this stock for four consecutive quarters, including: 10,000,382 shares in Q4 2023; 116,191,550 shares in Q1 2024; 389,368,450 shares in Q2 2024; and an estimated 100,000,000 shares in Q3 2024.
An estimated 100 million shares were sold in Q3 based on Berkshire's published data on its position in Apple valued at $69.9 billion. Based on Apple's stock price on September 30, this figure is equivalent to 300 million shares, which is a decrease of 100 million shares compared to the end of June.
With the average stock price of Apple each quarter, as well as Apple's closing price of $227.48 per share on November 7, Buffett's decision to sell has cost Berkshire Hathaway nearly $21.2 billion in profits.
Although Apple's business has weakened somewhat, Berkshire selling off shares of the iPhone maker due to corporate tax reasons has so far been a 'costly mistake'.
Refer to The Motley Fool
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