Apple - Did Warren Buffett predict the stock market crash?

The legendary investor is selling off securities on a large scale – including his favourite stock, Apple. On Monday, many prices plummeted. Did Buffett already have a premonition of this?

The news that Warren Buffett has radically reduced his stake in iPhone manufacturer Apple was a surprise when it emerged in the quarterly figures for Berkshire Hathaway (NYSE:BRKa) at the weekend. The legendary investor has halved his Apple positions.

The share prices then plummeted on Friday and even more so on Monday. Did Warren Buffett foresee this or is he even partly to blame?

It is almost impossible to believe that he is responsible. The sales by Berkshire Hathaway were made over a period of months, and should therefore have led to a price collapse much earlier.

The analyst community sees completely different reasons: for example, the somewhat disappointing quarterly figures of many companies in the technology sector and the sobering figures from the US labour market. And of course the crisis in the Middle East, which is becoming more and more acute.

These are certainly all effects that have an impact, but it's not quite that simple. We always want to know in advance how the stock markets will develop, and we can't use all these events to know where the highs and lows will form. We need completely different instruments for that.

The truth is that Buffett has been pessimistic for some time

As early as February, he painted a pessimistic picture in his letter to shareholders and dampened expectations for the future. Berkshire Hathaway will no longer develop as strongly in the future as it has in the past. In the future, it will probably only be "slightly better" than an average American company.

We suspect that he has seen the coming correction because he relies heavily on his own data. He uses the so-called Buffet Index, which has served him well in the past. It shows whether corporate profits correlate with real economic conditions. The index pointed to the possibility of a recession, which is why he sold a significant portion of his Apple shares (NASDAQ:AAPL) and other stocks.

He does not believe in short-lived events, such as unemployment figures or similar things, which – if at all – only have a very short-term impact on the stock markets. In almost every long-term chart, there is no correlation between these figures and long-term price trends. The interest rate steps taken by the FED are also overrated. We also share this opinion.

In the past, we have learnt more from Warren Buffet than from any other investor. He uses a very simple approach: he only buys companies that he believes are massively undervalued at the time of purchase. He only buys shares in companies that he says he wants to hold forever. This approach no longer works quite so easily today because technological developments move much faster than they used to.

Warren Buffet, unlike us, did not see the enormous potential of Nvidia (NASDAQ:NVDA), for example. At some point, you have to recognise the signs of old age and find your own way to achieve lasting success in the stock market. We are convinced that today, in addition to tried and tested key figures, you have to use completely different instruments to be able to assess the market correctly.

But why has Warren Buffet drastically reduced his Apple positions?

A halving of the position is alarming for someone like Warren Buffet. So what is he afraid of? He has not sold Apple completely. He still believes that Apple will remain his strongest position because he considers the company to be quite extraordinary. One of the main reasons that we also see is that the Apple fan community is very large, identifies very strongly with the company and is willing to pay very high prices for the products.

Let's take a look at the current situation on the stock market using Apple as an example

It is possible that Apple has completed a significantly higher cycle at its high of $237.23, which is also the all-time high to date. Namely, a superordinate wave alt.(III). If that is the case, the share price would collapse to the region of the violet circle at $118.31 to $98.35 and only there would it turn around sustainably. And that could be exactly what Warren Buffet fears.

That is a very real danger for the share. Nevertheless, we do not believe that this scenario will prevail. We see this as an alternative that we must of course keep in mind.



Instead, we expect Apple to stabilise in the area of the purple box at $180.70 to $148.36 at the latest and to return to the upward trend, after which it will head for the long-term target of the red box at the top of the chart at $350.29 to $393.48. You can find our detailed analysis of the short-term price trend on our website (just click on the link next to my profile picture above). It is freely accessible to everyone and can be found under the "Example analysis" tab.

In our view, this also fits much better with the Nasdaq, Dow Jones and S&P 500 indices, as well as the driving forces, namely a large number of strong technology stocks such as Meta, Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL) and Nvidia. Only Tesla could sell off a little more, and Nvidia will soon decide whether the share will continue to rise or whether it will collapse now.

We stand for openness and transparency. What we have said about the mentioned stocks can be found in our articles here on Investing: Google, Meta and Tesla.

You can find out more about us on our website, which you can access via the link next to my profile picture above this text.

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The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.