Why did Buffett ditch Apple?

Austin and Berkshire Hathaway just hosted their annual event in Omaha. It was a major event that attracted a lot of attention every year. However, the biggest focus this year is probably Warren Buffett's sale of a significant amount of Apple shares.

Is this a drop in trust in Apple, or is there more to the story?

Selling 20 billion dollars in one position is huge. However, it is necessary to apply this to context.

First of all, it is worth noting that although the amount is remarkable, Buffett rarely cuts positions to the scale of several billion dollars.

He said that the holding period for favorites is eternal.

So certainly on the surface, it may seem like he is losing trust in Tim Cook and Apple's product lineup.

When we begin to apply this to the context of this position, another story comes to mind.

Apple made up around 50% of Berkshire's publicly traded portfolio at its peak, thanks to the incredible share price increase it has realized since it first bought shares. Even after cutting around 13% of that stock, it was still 40% of his publicly traded portfolio.

Buffett is still clearly voting with his wallet if he believes in Apple. So the question is why they sell it.

Do you need cash? Probably not.

Buffett holds about 170 billion dollars in cash on Berkshire's balance sheet. And many people say there is a possibility that it will exceed 200 billion dollars in the near future. The real reason seemed to be at the general shareholders' meeting, and he suggested that it might be a tax reason.

And he sees a possibility that tax rates will rise. He said it would be better to pay 21% of the shares that will be spent next year or the year after next.

We all know that considering the many budget shortfalls and huge spending by Congress that are making headlines, there is a possibility that drastic tax increases will be realized in the next few years.

Since Buffett sold $20 billion worth of Apple shares, should I follow Buffett's example and relinquish my shares today?

That's not the case. It is necessary to understand this according to the situation. He actually only cut his own stakes. He stole a small amount of money from the table, so to speak. They're probably going to pay taxes at a lower rate than they are now.

And, as Buffett himself has said for years, his elephant gun contains bullets. He may now be considering a purchase of between $50 and $100, or maybe $150 billion. If he uses an additional $20 billion that he may have obtained from Apple shares, there is a possibility that it will be slightly easier to reverse Berkshire's balance sheet without drastically reducing it.