Apple isn't all Warren Buffett is bullish on

Pablo Tucker
February 28, 2017

The billionaire Warren Buffett, whose stock picks over several decades have turned Berkshire Hathaway into one of the most successful conglomerates in the world, criticised Wall Street on Saturday, saying investors should "stick with low-priced index funds".

"When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients", Buffett said in his annual letter to shareholders.

"That simply isn't the case: both American corporations and private investors are today awash in funds looking to be sensibly deployed".

Investors who wanted billionaire Warren Buffett to address the current state of the world in his annual letter to Berkshire Hathaway shareholders will likely be disappointed, but they can still take some comfort in his consistently rosy long-term outlook for the USA economy.

Buffett used the letter to again explain the advantages of low-priced index funds. The bet still has a year to run but it certainly looks like Buffett's going to win. It's not that investors aren't ignoring this sort of advice (which Buffett has stated several times in previous letters).

Mr Buffett, whose record of beating the stock market over the past 50 years is unparalleled, is known for being persistently optimistic about the prospects of the U.S. economy.

Buffett argued that those with a negative long-term outlook on the economy should not take their own predictions seriously.

And he returned to a persistent theme of fund managers and value for investors.

Warren Buffet praised "ambitious immigrants" and reiterated his stance that America's babies are "the luckiest crop in history" in his annual letter to shareholders. So Buffett said most investors are better off not trying.

That makes Apple (AAPL, Tech30) Berkshire's third largest holding, trailing only Kraft Heinz (KHC) - which recently pulled the plug on a more than $140 billion offer to buy European food conglomerate Unilever (UL) - and scandal-ridden bank Wells Fargo (WFC).

Well, the billionaire businessman is back in the news.

Operating profit rose just 1 percent to $17.58 billion, despite January's $32.1 billion purchase of aircraft parts maker Precision Castparts Corp, Berkshire's largest acquisition.

Berkshire started buying shares of Apple in mid-2016, and had 61 million shares by the end of the year.

"That doesn't mean they can't criticize him or they can't disagree with what he's doing maybe", Buffett said. Buffett has been highly negative on airline stocks ever since he made an ill-fated investment in US Airways in 1989. Nonetheless, he said it was extremely hard to time the market and that stocks could plunge tomorrow. Known to fans as "the Oracle of Omaha", he estimated that the search for outperformance has caused investors to "waste" more than $100 billion over the past decade. "One word sums up our country's achievements: miraculous".

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