Warren Buffett explains why Berkshire reduced its big Apple stake

Let's start, given what you mentioned, there was some news that came out in the 10th quarter this morning that shows that Burkshire sold another 115 million shares of Apple in this last quarter, which is Berkshire's largest holding and I think in that sense We'll start with a question from Sherman Lamb, he's a 27-year-old Berkshire Hathaway Class B shareholder from Malaysia, and he asks me: last year you mentioned that Coca-Cola and American Express were the two long-standing part-ownership positions of Berkshire and you spent some time talking about the Have your or your investment manager's views on the economics of Apple's business or its attractiveness as an investment changed since Berkshire first invested in 2016?

The virtues of these two wonderful businesses in their recent letter to shareholders? uh no, I would, but we've sold shares and uh, I would say at the end of the year, I think it's very likely that Apple will be the largest holding of common stock that we have right now. One interesting thing is that, uh, Charlie. and I looked at common stocks or marketable stocks or things that people love to see as businesses and so when we own a Dairy Queen or whatever we consider it a business and when we own Coca -Cola uh or American Express or ra we see it as a business now we can buy really wonderful companies in the market as businesses we can't buy them all, I mean all the stocks we can't buy 90% or 80% or something like that, but when we look at C colon, American Express and Apple, we look at them as companies, now there are differences in tax factors, there are differences in manager liability, a lot of things, but in terms of deploying your money, uh, we.

We always look at every stock as a business and we don't, we have no way, we don't try to predict the markets, we don't try to pick stocks. I went through many, many years, doing the wrong thing. I became interested in stocks. very early and I was fascinated by them and uh and I wasn't wasting my time because I was reading every possible book and everything else, but I finally picked up a copy of The Intelligent Investor in Lincoln and there were some sentences in there. He said that much more eloquently than I can say it, but if you look at stocks as a business and treat the market as something that doesn't tell you, it's not there to instruct you, but to serve you. much better over time than if you try to take charts and listen to people talk about moving averages and look at bed pronouncements and all that kind of stuff, and that made a lot of sense to me, that and the way the way that I was allowed to implement it, Charlie and I talked about this, of course, constantly, it's changed over the years as the amount of capital we have and the type has changed and all that, but the basic principle was established by B Graham in that book I bought for a couple of dollars that basically told me, "You've been wasting your time now, but maybe you can use what you've learned or what you've been reading about and make it better." use it and then Charlie came and told me how to put it to even better use and that's the story of why we own American Express, which is a wonderful business, we own Coca-Cola, which is a wonderful business and we own Apple, which is an even better business, uh, but uh, and we will own, unless something really extraordinary happens, we will own Apple and American Express in Coca-Cola, uh, uh, when Greg takes over this place and, uh, uh, that's it, it's such a simple approach that it's almost deceptive for most things if you keep working harder and harder, you know you learn a little more math or you learn a little more physics, but the investments you don't really have to make, you really have to get your mindset right. so we will finish and at least something dramatically happens that really changes the capital allocation uh a strategy uh uh we will uh we will have Apple is our largest investment uh but I don't care at all under the current conditions build uh the uh cash position, I think When I look at the alternative of what's available in the stock markets and I look at the makeup of what's happening in the world, we find it quite attractive and one thing that may surprise you, but uh, uh, almost everyone I know pays a lot of attention. more attention to not paying taxes, then I think they should do it, we, we, we don't care about paying taxes in Berkshire and we are paying a 21% federal rate on profits.

We are absorbing Apple and that rate was 35% not long ago and it has been 52% in the past, when I have been operating and the government owns, the federal government owns a portion of the profits from the business that we do not They own the assets, but they own a percentage of the profits and they can change that percentage any year and the percentage they have currently decreed is 21% and I would say with the present. fiscal policies uh I think something has to give and I think higher taxes are very likely and uh the government wants to take more of your revenue or M o bures uh they can do it and uh uh they can decide that one day they don't want that the fiscal deficit is so large because that has some important consequences and they may not want to cut spending much and they may decide that they will take a larger percentage of what we earn and we will pay for it. and we always expect at Berkshire to pay significant federal income taxes.

We think it's fitting that a company, a country that has been so generous to our owners, has been the place that I got lucky with, Berkshire got lucky here and, uh, uh, if we send a check like we did last year, We sent over 5 billion dollars to the US federal government and if 800 other companies had done the same, no other person in the United States would have had to pay a single cent in federal taxes, whether taxes or not. social security taxes not estate taxes no, it's up and down the line now that's that, uh, I'd like to, I'd like to, I hope things develop well enough with Burkshire for us to say we're in the club 800 and maybe we'll even move. go up a few points uh it doesn't bother me in the least uh writing that check and uh I really hope that with everything that America has done for all of you it shouldn't bother you that we do it and if I do we will do it at 21% this year and we will do it at a higher percentage later.

I don't think they care about the fact that we sold a small

apple

this year.