For Immediate Release

Chicago, IL – May 8, 2018 – Today, Zacks Investment Ideas feature highlights Features: Apple AAPLFacebook FB, Amazon AMZN and Microsoft MSFT.

What Did It Take to Reignite the Rally? Warren Buffett

After four months of solid economic data, low inflation and unemployment, historically strong earnings reports and an all-around “goldilocks” economy, the broad markets remained in the doldrums, basically unchanged on the year.  Volatility has reigned as investors struggled to decide which direction stocks would go next.

All of that changed when Warren Buffett spoke on Thursday.

Speaking to the media prior to the Berkshire Hathaway annual shareholder’s meeting, Buffett disclosed that he had purchased an additional 75 million shares of Apple (AAPL) in the in the first quarter of 2018, adding to the 165 million shares that Berkshire already held. Their total position is now valued at more than $43 billion.

Employing his traditional folksy-genius logic, Buffett outlined his plan to hold Apple for the long term – 10 or 20 years – and implored investors to ignore noisy data like the number of iPhones sold in any given quarter and focus on the fact that Apple sells products that have become ubiquitous. 

The “Oracle of Omaha” laid out a convincing bull case for the world’s biggest company, pointing out their $60 billion in annual earnings is almost twice as much as the second most profitable company in the U.S, pointing out “It’s a wide, wide gap.  It’s an amazing business.”

Apple stock, languishing of late due to less than rosy predictions about sales growth in phones, reported a big earnings beat last week, raised guidance, raised the dividend and announced an additional $100M in stock buybacks. 

Buffett pointed out the simple math behind the aggressive buybacks.  “We own about 5%,” he said “But I know I don’t have to do a thing and probably in a couple years we’ll own 6% without laying out another dollar.”  He went on to say that not only did he not care about short term price performance, but that he would actually prefer for the stock to trade lower so that the buybacks would pack a bigger punch.  That’s the thinking of a true long-term investor.

Already buoyed by the strong earnings announcement, Apple stock rallied to new all-time highs and pulled the markets along with it.  Coupled with great Q1 earnings at Facebook (FB), Amazon (AMZN), Alphabet and Microsoft (MSFT), the indexes shrugged off their recent malaise and resumed their bull run, with the S&P 500 gaining 3% in the last two trading sessions and the Nasdaq 100 gaining more than 4%.

With a market Capitalization of $912B, Apple represents more than 12% of the Nasdaq 100 index and the recent rally – thanks to the popularity of indexed investing – has pulled the entire market with it.

In uncertain times, all investors can learn a valuable lesson from Buffett, one of the greatest investors of all time, do your homework and treat short term dips in the companies you want to own as buying opportunities.

Follow us on Twitter:  http://twitter.com/ZacksResearch

Join us on Facebook:  http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

[email protected]

http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
To read this article on Zacks.com click here.