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

Warren Buffett says bitcoin is 'rat poison'

Warren Buffett says bitcoin is 'rat poison'

Tell us how you really feel, Mr. Buffett.

The price of bitcoin took a dive after Warren Buffett renewed his criticism of the cryptocurrency — even comparing it to rat poison.

Bitcoin had been closing in on $10,000, but it fell nearly 6% Sunday and was down another 2% Monday to just over $9,300.

Buffett, the CEO of Berkshire Hathaway (BRKB), has been a bitcoin bear for years. He has often compared the cryptocurrency to gold, saying that both assets are strictly speculative and don't produce earnings and dividends like stocks do.

Before the Berkshire annual meeting on Saturday, Buffett told CNBC that bitcoin was "probably rat poison squared."

During the meeting itself, Buffett joked that "if you had bought gold at the time of Christ and you figure the compound rate on it, it's a couple tenths of a percent." What Buffett was saying about bitcoin was that you can buy it, but it will never produce anything of value.

He also responded to a question from the audience about bitcoin by saying that it and other crytpocurrencies "will come to bad endings."

Berkshire vice chairman and longtime Buffett confidant Charlie Munger was even more blunt.

Related: Here is what happened at this year's Woodstock of capitalism

"I like cryptocurrencies a lot less than you do," Munger said to Buffett. "To me, it's just dementia. It's like somebody else is trading turds and you decide you can't be left out."

Munger has also referred to bitcoin as poison. At the shareholder meeting of The Daily Journal(DJCO), a newspaper publisher in Los Angeles where Munger serves as chairman, he called it "noxious."

Strong words. But to be fair to bitcoin bulls, both Buffett and Munger have been wrong about the cryptocurrency. Buffett in particular.

He first called bitcoin a "mirage" in 2014 — back when it was trading for about $600. So even with the recent pullback, bitcoin has drastically outperformed the broader market, not to mention Berkshire stock and top Berkshire holdings like Apple (AAPL).

That's why some cryptocurrency experts think that investors should ignore Buffett's and Munger's repeated bitcoin bashing.

"What I do find monumentally baffling is that two of the world's most successful investors cannot see the intrinsic value of some form of cryptocurrency," Nigel Green, CEO of financial consulting firm deVere Group, wrote in a report early Monday.

"Do they honestly believe that there is no place for, and no value of, digital, global currencies in an increasingly digitalized and globalized world?" Green added.

Warren Buffett explains one thing people still don't understand about bitcoin

Warren Buffett explains one thing people still don't understand about bitcoin

When it comes to bitcoin, billionaire investor Warren Buffett wants to make one thing clear: Unlike buying stocks, bonds or real estate, buying bitcoin is not an investment.

That's because it lacks intrinsic value, Buffett says.

"If you buy something like bitcoin or some cryptocurrency, you don't have anything that is producing anything," Buffett says in an interview with Yahoo Finance. "You're just hoping the next guy pays more. And you only feel you'll find the next guy to pay more if he thinks he's going to find someone that's going to pay more.

"You aren't investing when you do that, you're speculating."

Famous for his "buy and hold" investment strategy, the Berkshire Hathaway CEO built his company — and his $82.8 billion net worth — backing companies that have substantive value.

"Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value," Buffett wrote in his 1996 letter to shareholders. "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

To be an investment, what you're buying has to be worth something on its own, Buffett says.

For example, "If you buy something [like] a farm, an apartment house or an interest in a business and look to the asset itself to determine whether you've done something — what the farm produces, what the business earns ... it's a perfectly satisfactory investment," Buffett explains to Yahoo Finance. "You look at the investment itself to deliver the return to you.

"If you ban trading in farms, you could still buy farms, and have a perfectly decent investment," Buffett says.

Bitcoin, however, only increases in value by being bought and sold, he argues. Its value comes from what people are willing to pay.

"[I]f you ban trading in ... bitcoin, which nobody knows exactly what it is, people would say, 'Well why in the world would I buy it?'"

"The idea that it has some huge intrinsic value is just a joke in my view," Buffett said.

In 2017, bitcoin soared from below $1,000 at the start of the year to over $19,000 in December, catching the attention of everyone from J.P. Morgan Chase CEO Jamie Dimon to NFL players. Tuesday, bitcoin traded near $8,900 according to CoinDesk's price index.

Buffett sees a bleak future for the digital currency.

"In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," Buffett told CNBC in January."When it happens or how or anything else, I don't know."

Of course, Buffett has been wrong about backing new technologiesbefore. He missed opportunities to invest in Google and Amazon, decisions he now calls mistakes.

"I did not think [founder Jeff Bezos] could succeed on the scale he has," Buffett said to shareholders in May 2017.

Crypto-enthusiasts argue that Buffet doesn't understand blockchain-based coins, and he has admitted as much.

Still, many other investing experts like CNBC's Jim Cramer, Kevin O'Leary and Tony Robbins, also call buying cryptocurrencies a gamble. They suggest thinking of it like rolling the dice in Las Vegas.

"As long as you can afford to lose everything you put into it, go with it," O'Leary told CNBC Make It in December, 2017.

That mindset is alright with Buffett.

"There's nothing wrong with it if you want to gamble [that] somebody else will come along and pay you more money tomorrow," Buffett tells Yahoo Finance. "That's one kind of game. That is not investing."

Don't miss: Here's how much grad school cost when Warren Buffett graduated in 1951, compared to today

Like this story? Like CNBC Make It on Facebook!

credit:  https://www.cnbc.com/2018/05/01/warren-buffett-bitcoin-isnt-an-investment.html

6 Rules From 6 of the World's Top Investors

By Tim Parker | Updated November 20, 2017 — 2:41 PM EST

 SHARE

 

 

Investors don't agree on much, but they do agree that making money in the market comes with a steadfast strategy that is built around a set of rules. Think for a moment about your early days as an investor. If you're like many, you jumped in with very little knowledge of the markets. When you bought, you didn't even know what a spread was, and you sold either too early if you saw a gain or too late if your stock dropped in value. If your only investing rule has been to not follow any rules, you're probably disappointed with your results so far.

TUTORIAL: How to Pick a Stock

If you don't have your own carefully crafted suite of investing rules, now is the time to do it, and the best place to start is to ask the people who have had success in their investing careers. We not only found people who can claim success, we found six of the most successful investors in history.

"Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are 'right' only 30% of the time, as long as our losses are small and our profits are large." – Dennis Gartman

Dennis Gartman began publishing The Gartman Letter in 1987. It is a daily commentary of global capital markets that is delivered to hedge funds, brokerage firms, mutual funds, and grain and trading firms around the world each morning. Gartman is also an accomplished trader and a frequent guest on financial networks.

His rule above addresses a number of mistakes young investors make. First, don't sell at the first sign of profits; let winning trades run. Second, don't let a losing trade get away. Investors who make money in the markets are OK with losing a little bit of money on a trade but they're not OK with losing a lot of money.

As Gartman points out, you don't have to be right a majority of the time. What is more important is to let a winning trade run and get out of a losing trade quickly. If you follow this rule, the money you make on the winning trades will far outpace the losing trades.

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price" – Warren Buffett

Warren Buffett is widely considered to be the most successful investor in history. Not only is he one of the richest men in the world, but he also has had the financial ear of numerous presidents and world leaders. When Buffett talks, world markets move based on his words.

Buffett is also known as being a prolific teacher. His yearly letter to investors in his company, Berkshire Hathaway, is used in college finance classes in the largest and most prestigious universities.

Buffett gives two key pieces of advice to the investor in his quote above. First, when evaluating a company, look at the quality of the company. This requires that you understand balance sheets, listen to conference calls and have confidence in the management. Second, only after you have confidence in the quality of the company should the price be evaluated. According to Buffett, if the quality of the company is high, don't expect to buy it at bargain-bin prices. Conversely, if the company isn't a quality company, don't buy it because the price is low. Bargain-bin companies often produce bargain-bin results. (To learn more, see What is Warren Buffett's Investing Style.)

"Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count. Good [investment] ideas should not be diversified away into meaningless oblivion." – Bill Gross

Bill Gross is the co-founder of PIMCO and managed the PIMCO Total Return Fund, one of the largest bond funds in the world.

Gross' rule speaks about portfolio management. A universal rule that most young investors know is diversification, i.e., not putting all of your investing capital into one name. Diversification is a good rule of thumb, but it can also diminish your profits when one of your picks makes a big move while other names don't. Making money in the market is also about taking chances based on exhaustive research. Always keep some cash in your account for those opportunities that need a little more capital and don't be afraid to act when you believe that your research is pointing to a real winner.

"We're getting hurt, but I'm a long-term investor"- Prince Alwaleed Bin Talal

You may have never heard of Prince Alwaleed Bin Talal, but he's well known in the investing world. An investor from Saudi Arabia, he founded the Kingdom Holding Company. If anybody had reason to panic, it is him. Prior to the Great Recession, he owned a 14.9% stake in Citigroup at a price much higher than its post-recession price. In addition to that, his real estate investments in India lost considerable value after the 2009 recession.

When others sold, Prince Alwaleed Bin Talal did what many of the best investors do to amass their riches: Hold their investments for a long period of time, taking large market events out of the picture and collecting a dividend while they wait.

It's OK to trade stocks on a short- or medium-term basis, but the bulk of your portfolio should be invested in longer-term holdings.

"You learn in this business… If you want a friend, get a dog." – Carl Icahn

Carl Icahn is a private equity investor and modern-day corporate raider, buying large stakes in companies and attempting to get voting rights to increase shareholder value. Some of his holdings have included Time Warner, Yahoo, Clorox and Blockbuster Video.

Icahn has made his fair share of enemies over the years, but investors shouldn't take his advice strictly in terms of interpersonal relationships. How many times in your investing past have you read an article, watched a news report or took a tip from a trusted friend about the next hot stock and lost money? (Hopefully you never acted on an unsolicited e-mail sent to you about a big-moving penny stock.)

There is only one piece of advice to act upon: Your own exhaustive research based on facts (not opinions) obtained from trusted sources. Other advice can be considered and verified, but it shouldn't be a sole reason to commit money.

"I am convinced that all this poverty in Mexico and in Latin America, like it's happening in China is the opportunity to grow. It's an opportunity for investment" – Carlos Slim

Another of the richest men in the world, Carlos Slim, owns hundreds of companies and has an employee base of more than 250,000. His quote represents a mindset that the best investors possess. They don't look at what's happening now. By studying the momentum of a company or an entire economy. and how it interacts with its competitors, great investors invest now for what will happen later. They are always forward thinking. If you're looking at now or trying to jump on the bandwagon of an investment that has already had short-term gains, you've probably missed the big move. Try to find the next big winner, but always anchor your portfolio with great companies that have a long track record of steady growth.

The Bottom Line
Now that you've read about one of each of these investors' rules, it's time to become a student of these investors and learn from their experiences. Each of these investors is known for being students of the markets, as well as leaders. As you begin to apply your new rules and commit to following them even when your mind tells you no, you'll see the profits start rolling in

Read more: 6 Rules From 6 Of The World's Top Investors https://www.investopedia.com/articles/financial-theory/11/6-lessons-top-6-investors.asp#ixzz5J2DPUfKN
Follow us: Investopedia on Facebook

Read more: 6 Rules From 6 Of The World's Top Investors https://www.investopedia.com/articles/financial-theory/11/6-lessons-top-6-investors.asp#ixzz5J2DJufiR
Follow us: Investopedia on Facebook

Joel Greenblatt

Joel Greenblatt (born December 13, 1957) is an American academic, hedge fund manager, investor, and writer. He is a value investor, and adjunct professor at the Columbia University Graduate School of Business. He is the former chairman of the board of Alliant Techsystems and founder of the New York Securities Auction Corporation. He is also a director at Pzena Investment Management, a high-end value firm.

John C. Bogle

ohn Clifton "Jack" Bogle (born May 8, 1929) is an American investor, business magnate, and philanthropist. He is the founder and retired chief executive of The Vanguard Group.

His 1999 book Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor became a bestseller and is considered a classic within the investment community.

Seth Klarman: Personal life

Personal life[edit]

Klarman typically keeps a low profile, rarely speaking in public or granting interviews.^[22] He lives in Chestnut Hill, Massachusetts with his wife, Beth Schultz Klarman, whom he met on a Boston Harbor cruise in 1982; they have three children.^{[1][23][24][25]} His brother, Michael Klarman, is a professor at Harvard Law School

Seth Klarman: Investment career

Investment career[edit]

Further information on Seth Klarman's leadership of the Baupost Group: Baupost Group

After graduating from business school in 1982, he founded the Baupost Group with Harvard Professor William Poorvu and partners Howard Stevenson, Jordan Baruch and Isaac Auerbach. The name is an acronym based on the founders' names (the name was decided on before Klarman joined the project).^[7] Poorvu asked Klarman and his associates to manage some money he had raised from the selling of his share in a local television station and the fund was started with US$27 million in start up capital.^[7] His starting salary was $35,000 a year, considered low to alternative job offers,^[15] and he later recalled that the other founders "were taking a big risk on a relatively inexperienced person."^[7] Early on in his investment career, he used to badger Goldman Sachs salesmen with questions regarding their options and thoughts on the markets that they were afraid to pick up the phone if they saw that Baupost was calling.^[7]

In February 2008, Klarman was alerted that a London-based hedge fund, Peloton Partners, were forced to liquidate more than a billion dollars worth of their assets, he decided to open up his fund to new investors subsequently raising $4 billion in capital, mainly from large foundations and Ivy League endowments. He believed that there was serious market opportunity for value investors in the coming months and after the collapse of AIG and Lehman Brothers, he invested heavily in the equity markets, sometimes throwing $100 million into stocks a day. While the market was down due to the aftermath of the crisis he purchased many distressed securities and bonds. By early 2009, after J.P. Morgan Chase acquired Washington Mutual as a part of their deal with the U.S. Treasury, and SallieMae's bonds were returning double digit figures he would see serious returns. Overall, Klarman's bond position appreciated 25%, however, during the financial crisis, his fund returned -7% to -13%. Although many hedge funds faced negative returns and low performance during the crisis and its aftermath, Klarman saw increased equity positions and described it as a "fortuitous time" for the fund's capital gains.^[7] The same year he would go on to buy a minority share in the Boston Red Sox, via a stake in Ed Eskandarian.^[7]

In 2009, Klarman began buying distressed credits in the wake of the financial crisis of 2007–2008. He purchased the bonds of CIT Group, a financial holding company based in New York City at 65 cents on the dollar with a yield rate of 15%. After the company went into prepared bankruptcy, as Baupost began lending it money via a loan, Carl Icahn gave a loan of $6 billion to the CIT Group but backed out of the deal a week later. This caused the bonds to speed into prepared bankruptcy and gave the Baupost group securities valued at 80 cents to the dollar for their debt in CIT Group.^[7] Shortly after the CIT deal was finalized, Klarman amassed a stake in a new bio-tech company called FacetBiotech, at an average cost of $9 a share. At the time, FacetBiotech had $17 a share in net cash. Klarman noted that when stocks are spun off of their larger parent companies they become "cheap and ignored."^[7] When Biogen eventually tried a hostile takeover of the company bidding up the price to $14 a share, Abbott Laboratories asked for a $27 per share settlement for acquisition. Klarman's fund finished that year up +27%.^[7]

As of fiscal year 2016, the fund has US$31 billion in assets under management.^[

Seth Klarman

Seth Andrew Klarman (born May 21, 1957)^[2][3] is an American investor and hedge fund manager. He is known as a value investor and is currently the chief executive and portfolio manager of the Baupost Group, a Boston-based private investment partnership he founded in 1982.

He closely follows the investment philosophy of Benjamin Graham and is known for buying unpopular assets while they are undervalued, seeking a margin of safety and profiting off of their rise in price. Since his fund's $27 million-dollar inception to 2008 he has realized a 20 percent compound return-on-investment and as of 2016 manages $31 billion in assets.

In February 2018, Forbes Magazine listed his personal fortune at US$1.50 billion. In 2015, Klarman was listed as the 15th highest earning hedge fund manager in the world.^[1] In 2008, he was inducted into Institutional Investors Alpha's Hedge Fund Manager Hall of Fame.^[4] He has drawn numerous comparisons to fellow value investor Warren Buffett, and akin to Buffett's notation as the "Oracle of Omaha," he is known as the "Oracle of Boston."^[5

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]