Dow Jones Drops Nearly 700 Points; When Long-Term Apple Holders Should Sell

A big haircut in the quarterly revenue outlook for Apple sent U.S. shares tail-spinning in what has become a common refrain in stocks today for the past few months. The Dow Jones industrial average and the Nasdaq composite acted as co-leaders of the sell-off, each falling 2.8% to 3% and ending practically at the session's low.

The S&P 500, which dropped 6.2% (excluding dividends) in 2018, sank more than 2.4%. Intense buying in defensive areas of the market — think dairy and meat, property REITs, gold mining and telecom services — provided little solace for most investors. The Dow Jones utility average rose nearly 0.1% after falling almost 1.7% on Wednesday.

Dow Jones industrial component Verizon Communications (VZ), formerly on IBD Leaderboard, edged up 0.3%. The stock is trying to reclaim its rising 50-day moving average. Watch for a potential new base to form.

Curiously, small caps performed relatively better but still caved in price. The Russell 2000 fell 1.3%. The S&P SmallCap 600 fell 1.8%, snapping a five-day winning streak.

Volume ran higher vs. the same time Wednesday on both main exchanges, according to early data, signifying heavy institutional profit-taking.

Perhaps institutions are selling shares of multinational corporations much harder, given the clear evidence mounting in China of a growth slowdown. U.S. and China have called a 90-day truce on the trade war and have until March 1 to find a way to end the festering battle on import tariffs.

Apple Leads Dow Jones Lower

Apple gapped down at the open and remained near session lows, falling as much as 10%. The iPhone, iPad, Macbook and digital services giant cut its revenue guidance for the just-ended fiscal first quarter to $84 billion, down from $91 billion. This means Apple's top line is likely to fall nearly 5% on a year-over-year basis.

Such a drop in the top line would be the first since a 9% decline in the fiscal fourth quarter that ended in September 2016.

The Street, before the bombshell news from CEO Tim Cook shared late Wednesday, had been expecting fiscal Q1 profit to rise 20% to $4.65 a share. That comes after adjusted EPS gains of 18%, 24%, 16%, 30%, 40% and 41% in the prior six quarters. The consensus revenue growth forecast for the December-ended holiday quarter prior to the revised forecast came in at $91.49 billion, up 4%.

As the Stock Market Today column had noted frequently in the past, Apple began its impressive run after staging a clean breakout from a first-stage (or early stage) cup with handle on Jan. 6, 2017. The buy point at the time: 118.12. Since that breakout, the megacap tech rallied as much as 97% to its peak of 233.47 on Oct. 3 last year. Along the way, Apple built a series of additional bases, such as the flat base, and gentle pullbacks to the 10-week moving average. These actions presented new buy points along Apple's 21-month price run.

This breakout coincided with a turnaround in Apple's fundamentals. Exactly two years ago, Apple had reported its first quarter of year-over-year gains in both profits (up 2%) and sales (up 3%) in four quarters.

The complexion of Apple's chart action completely changed during the week ended Nov. 2. The stock cleaved through its 10-week moving average near 220.57, falling more than 4% for the week in volume that shot up 51% above its 10-week average. Apple hardly tried to rally back above this key support-and-resistance level; thus, a key IBD sell signal was born.

Apple Stock Strategy Now: Avoid A Full Round Trip Of Profits

Given the strong advance since that breakout, Apple shareholders who bought at the proper breakout point must draw a line in the sand. A solid gain should never be allowed to turn into a loss.

At the day's low of 142.08, Apple has now fallen 39% from a 233.47 peak.

Typical base patterns such as the cup with handle and double bottom generally show a decline of no more than 30% to 33%. But this often is the case in a bull market. With the bears in control, one can expect some corrections in top growth stocks to exceed that range. Breakouts from deep bases do work, but the probabilities are lower.

Warren Buffett lives in a modest house that's worth .001% of his total wealth — here's what it looks like

Located in a quiet neighborhood of Omaha, Nebraska lies the home of billionaire Warren Buffett. He bought the house for $31,500 in 1958 or about $250,000 in today's dollars. It's now worth an estimated $652,619. He calls it the "third-best investment he's ever made." Following is a transcript of the video.

This is the home of billionaire Warren Buffett. Located in a quiet neighborhood of Omaha, Nebraska. He bought the house for $31,500 in 1958, $250,000 in today's dollars. It's now worth an estimated $652,619. He calls it the "third-best investment he's ever made."

It's 6,570 sq. feet and has 5 bedrooms and 2.5 bathrooms. Fences and security cameras guard the property. Why hasn't Buffett moved to a more extravagant home? He told BBC, "I'm happy there. I'd move if I thought I'd be happier someplace else."

Warren Buffett: ‘Tesco was a huge mistake’

Billionaire investor’s fund Berkshire Hathaway owns 4.1% of supermarket but falling share price has cost it £465m in a year

Renowned US investor Warren Buffett has said he made a “huge mistake” by investing in Tesco, as the problems mount at Britain’s largest retailer.

Tesco shares have slumped 45% this year as the supermarket issued four shock profit warnings and last week became embroiled in an accounting scandal, admitting it had overstated its profits by £250m. The retailer has been the worst performer in the FTSE 100 index this year and its shares are at an 11-year low.

Buffett, pictured, known as the Sage of Omaha and one of the world’s richest people, is Tesco’s third-largest shareholder, with a 4.1% stake, held through his Berkshire Hathaway investment business. However, the value of Buffett’s stake has fallen by about $750m (£465m) this year.

Buffett first bought into Tesco in 2006 – when Tesco was expanding rapidly in the UK and across the globe and was planning to open a new chain in the US – and steadily increased his holding.

However its US business, called Fresh & Easy, was eventually closed down altogether at a total cost of £1.8bn.

Undaunted by a shock profit warning from the company, Buffett raised his stake to over 5% when others were selling the stock. Tesco was the only stock in his top 15 picks that recorded a loss last year. Buffett told CNBC: “I made a mistake on Tesco. That was a huge mistake by me.”

The UK’s financial regulator has launched a full-scale investigation into the accounting scandal that has plunged Tesco even deeper into crisis. The retailer’s new boss, Dave Lewis, is tasked with restoring Tesco’s battered reputation as well as fixing its business amid rapidly declining sales.

Meanwhile, star UK fund manager Neil Woodford – who decided to sell his stake in Tesco in 2012 after its first profit warning – said last week it could be a long time before any of the British supermarkets became good investment prospects again.

Elsewhere in the grocery sector, Sainsbury’s shares fell again on Thursday, trading down nearly 4% at 224.8p, after its new boss, Mike Coupe, revealed a slump in sales and warned that Britain’s supermarkets are facing a “perfect storm” of problems.

Since you’re here …

… we have a small favour to ask. More people are reading the Guardian than ever but advertising revenues across the media are falling fast. And unlike many news organisations, we haven’t put up a paywall – we want to keep our journalism as open as we can. So you can see why we need to ask for your help. The Guardian’s independent, investigative journalism takes a lot of time, money and hard work to produce. But we do it because we believe our perspective matters – because it might well be your perspective, too.

I appreciate there not being a paywall: it is more democratic for the media to be available for all and not a commodity to be purchased by a few. I’m happy to make a contribution so others with less means still have access to information.Thomasine, Sweden

credit:   https://www.theguardian.com/business/2014/oct/02/warren-buffet-tesco-huge-mistake

Joel Greenblatt: Philanthropy

Philanthropy[edit]

Greenblatt is also famous for his contributions to education in New York City. In 2002, he donated $2.5 million to P.S. 65Q, a public elementary school in the borough of Queens, whose students come largely from the neighborhood's South American and South Asian immigrant communities. This investment, equal to about $1,000 per student per year over five years, helped P.S. 65Q to go from a struggling school to an urban success story almost overnight. He continues to aid the school in Ozone Park currently as they have continued to rise. Recently the school and principal Rafael Morales received a progress report score of A, scoring 98 out of a possible 100 points.

In 2006, Greenblatt also helped start the Success Academy Charter Schools, then known as the Harlem Success Academy Charter School, an elementary school in the city's historically African American neighborhood.^[10] He is also a board member of the Institute for Student Achievement, a national leader in developing new small high schools and transforming large comprehensive public high schools into small learning communities.^[11]

Greenblatt is a founding Master Player of the Portfolios with Purpose virtual stock trading contest.

John C. Bogle: Early life and education

Early life and education[edit]

John (Jack) Bogle was born on May 8, 1929 in Verona, New Jersey to William Yates Bogle, Jr., and Josephine Lorraine Hipkins.

His family was affected by the Great Depression. They lost their inheritance and had to sell their home, with his father falling into alcoholism which resulted in his parents' divorce.^[3]

Bogle and his twin David attended Manasquan High school on the New Jersey shore for a time. Their academic record there enabled them to transfer to the prestigious Blair Academy on work scholarships. At Blair, John showed a particular aptitude for math, with numbers and computations fascinating him. In 1947, John graduated from Blair Academy cum laude and was accepted at Princeton University, where he studied economics and investment. During his university years, John was determined to examine the mutual fund industry that had not been analyzed before. Bogle spent his junior and senior year working on his thesis "The Economic Role of the Investment Company".^[4]

He earned his undergraduate degree in 1951, and attended evening and weekend classes at the University of Pennsylvania.

Seth Klarman: Publications and works

Publications and works[edit]

Klarman has written many annual letters to shareholders but has kept a limited role in writing articles, opinion editorials or books. In an interview with Charlie Rose, he discussed the popularity of his shareholder's letters and a request on behalf of HarperCollins to write and publish a book on investing.^[42] He followed up on this request by publishing his first and as of February 2017, his only book, Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor, a reflection of value investing found in his hedge fund. In the book he outlines the various issues with retail investing, and critiques small time investors getting into the market purely using metrics such as price momentum and losing money in the long run. He issues that this is speculation and at times gambling, and should be discouraged in the market place. The book asserts that more people should become value investors or people who invest in stocks that trade below their underlying value so as to purchase them at a discount.^[43]

The book had amassed a cult following among retail investors, professional and institutional investors as well as Wall Street as a whole.^[44][40][45] Due to "only 5,000 copies [being sold],"^[42] the book has gone out of print and has become a relic in the finance community. Originally the book was priced at $25 a copy, however, due to it being out of print it has a market price of $700 for used versions with newer copies going for $2,500 to $4,000.^[43][1] University libraries report the book as "one of their most wait-listed titles as well as one most claimed as lost."^[43] He has stated that he would be interested in holding a charity event where he bids his book to Wall Street executives.^[42]

He edited the 6th edition of Benjamin Graham and David Dodd's Security Analysis in 2008.^[46][47]

Klarman's published books and substantial writings are listed below:

• Klarman, Seth. Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor. HarperCollins.

Seth Klarman: Early life and education

Early life and education[edit]

Seth Andrew Klarman was born on May 21, 1957 in New York City.^[6][2] When he was six he moved to the Mt. Washington area of Baltimore, Maryland near the Pimlico Race Track,^[7] and grew up in a traditional Jewish family.^[8][9][10] His father was a public health economist at Johns Hopkins University and his mother taught high school English.^[11][12] His parents divorced shortly after their moving to Baltimore.^[7]

When he was four years old he redecorated his room to match a retail store putting price tags on all of his belongings and gave an oral presentation to his fifth grade class about the logistics of buying a stock. As he grew older had a variety of small time business ventures including a paper route, a snow cone stand, a snow shoveling business, and sold stamp-coin collections on the weekends.^[6] When he was 10 years old he purchased his first stock, one share of Johnson & Johnson (the stock splitthree-for-one and over time tripled his initial investment). At age 12 he was regularly calling his broker to get stock quotes, his reasoning behind buying a share of Johnson & Johnson was the fact that he has used a lot of band-aids (a product of the company) during his earlier years.^[6]

Klarman attended Cornell University in Ithaca, New York, and was interested in majoring in mathematics but instead chose to pursue economics.^[7] He graduated magna cum laude in economics with a minor in history in 1979.^[13] In the summer of his junior year he interned at the Mutual Shares fund and was introduced to Max Heine and Michael Price. After graduating from college he went back to the company to work for 18 months before deciding to go to business school.^[7] He went on to attend Harvard Business School where he was a Baker Scholar and was classmates with Jeffrey Immelt, Steve Burke, Stephen Mandel, James Long and Jamie Dimon.

Charlie Munger: Personal life

Personal life[edit]

From his first marriage to Nancy Huggins,^[3] Munger had three children, Wendy (a former corporate lawyer and trustee of Stanford University^[20]), Molly (a civil rights attorney and funder of a ballot initiative to raise California taxes for public education.^[21]) and Teddy (deceased, leukemia, age 9).

From his marriage to Nancy Barry, Munger is a father of four children—physicist and Republican activist Charles T. Munger Jr., Emilie Munger Ogden, Barry A. Munger and Philip R. Munger—and two stepchildren: William Harold Borthwick and David Borthwick.^[22] Nancy Barry Munger died in 2010.^[23]

Munger enjoys architecture and has designed multiple buildings, including dormitories at Stanford University and University of Michigan as well as the house he currently inhabits.^[24]

Charlie Munger: Early life and education

Early life and education[edit]

Munger was born in Omaha, Nebraska. As a teenager he worked at Buffett & Son, a grocery store owned by Warren Buffett's grandfather.^[2]

After enrolling in the University of Michigan, where he studied mathematics, he never returned to Omaha except to visit.^[3]In early 1943, a few days after his 19th birthday, he dropped out of college to serve in the U.S. Army Air Corps, where he became Second Lieutenant. He continued his studies in meteorology^[4] at Caltech in Pasadena, California, the town he was to make his home.^[3]

Through the GI Bill he took a number of advanced courses through several universities; without an undergraduate degree, he entered Harvard Law School and graduated magna cum laude with a J.D. in 1948. At Harvard he was a member of the Harvard Legal Aid Bureau.^[4][5]

In college and the Army he developed "an important skill": card playing. “What you have to learn is to fold early when the odds are against you, or if you have a big edge, back it heavily because you don't get a big edge often. Opportunity comes, but it doesn't come often, so seize it when it does come.”

Charlie Munger

"Charles Munger" redirects here. For the American politician, mayor of Orlando, see Charles Henry Munger.

Charles Thomas Munger (born January 1, 1924) is an American investor, businessman and philanthropist. He is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; Buffett has described Munger as his partner. Munger served as chairman of Wesco Financial Corporation from 1984 through 2011. He is also chairman of the Daily Journal Corporation, based in Los Angeles, California, and a director of Costco Wholesale Corporation

Benjamin Graham

Benjamin Graham

Benjamin Graham (/ɡræm/; né Grossbaum; May 9, 1894 – September 21, 1976) was a British-born American investor, economist, and professor. He is widely known as the "father of value investing,"^[1] and wrote two of the founding texts in neoclassical investing: Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949). His investment philosophy stressed investor psychology, minimal debt, buy-and-hold investing, fundamental analysis, concentrated diversification, buying within the margin of safety, activist investing, and contrarian mindsets.

After graduating from Columbia University at age 20, he started his career on Wall Street, eventually founding the Graham-Newman Partnership. After hiring his former student and future manager of Berkshire Hathaway, Warren Buffett, he took up teaching positions at his alma mater, and later at Anderson School of Management at the University of California, Los Angeles.

His work in managerial economics and investing has led to a modern wave of value investing within mutual funds, hedge funds, diversified holding companies, and other investment vehicles. Throughout his career, Graham had many notable disciples who went on to receive substantial success in the world of investment, including Buffett, who described him as the second most influential person in his life after his own father. Other such disciples were William J. Ruane, Bert Olden, Irving Kahn and Walter J. Schloss. In addition, Graham's thoughts on investing have influenced the likes of Seth Klarmanand Bill Ackman.

Peter Lynch: Wealth and philanthropy

Wealth and philanthropy

According to a 2006 Boston Magazine article, Lynch has an overall net worth of $352 million USD.^[20]

Though he continues to work part-time as vice chairman of Fidelity Management & Research Co., the investment adviser arm of Fidelity Investments, spending most of his time mentoring young analysts, Peter Lynch focuses a great deal of time on philanthropy. He said he views philanthropy as a form of investment. He said he prefers to give money to support ideas that he thinks can spread, such as First Night, the New Year's Eve festival that began in Boston in 1976 and has inspired similar events in more than 200 other communities, and City Year, a community service program founded in Boston in 1988 that now operates in 14 locations.

The Lynches give money primarily in five ways: as individuals, through the Lynch Foundation, through a Fidelity Charitable Gift Fund, and through two charitable trusts.

The Lynches have made gifts as individuals, donating $10 million to Peter Lynch's alma mater, Boston College. BC, in turn, named the School of Education after the family.^[21][19]

The Lynch Foundation, valued at $125 million, gave away $8 million in 2013 and has made $80 million in grants since its inception.^[22] The Foundation supports education, religious organizations, cultural and historic organizations, and hospitals and medical research. Lynch was inducted into the Junior Achievement U.S. Business Hall of Fame in 1991.