Apple stock: Buffett is long, Burry is short. What should I do?

Our author thinks about whether following Warren Buffet into Apple stock might be a good addition to his portfolio – even with Michael Burry betting against it.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Social media and digital online concept, woman using smartphone

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Key Points

  • Warren Buffett's largest stock holding is Apple. Michael Burry is betting against the stock
  • It's possible that Buffett's investment might pay off over time while Burry is right about the near future
  • I'm watching Apple stock carefully, in case it drops into a level at which I'd like to buy it

Earlier this week, Warren Buffett reported that Berkshire Hathaway bought shares in Apple (NASDAQ:AAPL) during the first quarter of 2022. At around the same time, Michael Burry disclosed that Scion Asset Management has a short interest in Apple stock.

In other words, Buffett is betting on Apple going forward and Burry is betting that the share price is going to go down. So who’s right? And should I be buying Apple shares for my own portfolio?

Apple stock

Both Warren Buffett and Michael Burry are extremely sophisticated, intelligent, and thoughtful operators. But they seem to have come to a difference of opinion regarding Apple. 

Should you invest £1,000 in Computacenter Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Computacenter Plc made the list?

See the 6 stocks

As Buffett has pointed out in various interviews, there’s a lot to like about Apple stock. The company engenders strong loyalty among its customers, has high returns on invested capital, and uses its free cash to buy back shares aggressively. 

On the other hand, there are reasons for thinking that Apple stock might struggle going forward. Supply chain issues, increased costs of materials, and lockdowns in China – where a lot of Apple’s products are manufactured – might well impact sales in the near future.

Who’s right?

So is Buffett right to be buying Apple shares, or is Burry making a good move in betting against them? I think the answer is that they both are. 

In my view, the key to seeing why both Buffett and Burry might be right is observing that they have different time horizons. Where Buffett is looking at the long term, intending to hold Apple stock for an indefinite period, Burry is using the options market to make a bet on where the Apple share price is going in the near future. 

Buffett said in his most recent letter to shareholders that he does not make predictions about what a company’s share price will do. Rather, he invests based on his judgements of what the underlying business is likely to do over time.

In taking a short position, Burry is making a prediction about what the Apple share price will do in the near future. While that might be based on an assessment of how the company will perform, it’s fundamentally about share price movement. 

That means that it’s possible for both Buffett and Burry to be right about Apple stock. If the long-term prospects for the company are good, but the share price is likely to be hit by near-term headwinds, then Buffett’s long-term investment might prove wise even while Burry’s short-term bet against the stock also pays off.

Should I buy Apple stock?

The final question, then, is whether I should buy Apple shares for my portfolio. Personally, I think that there are more attractive opportunities at the moment – notably Amazon.com and Meta Platforms.

However, I’ll be watching the Apple share price carefully. Because if Burry is right and the share price is about to go lower, then I could be about to get a chance to buy shares in Warren Buffett’s largest stock position at a cheaper price in the near future.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Stephen Wright has positions in Amazon, Berkshire Hathaway (B shares), and Meta Platforms, Inc. The Motley Fool UK has recommended Amazon and Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businessman with tablet, waiting at the train station platform
Investing Articles

Here’s the growth forecasts for Next shares through to 2028!

Next's shares have risen in price again after another forecast-raising trading statement. Is the FTSE 100 company a white hot…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Up 145%, this investment trust has a P/E ratio of 10. Is it still a bargain?

The long-term track record of this investment trust has been excellent. Our writer thinks it could still be a bargain…

Read more »

Bournemouth at night with a fireworks display from the pier
Investing Articles

These 3 dividend shares are on fire but they’re still dirt-cheap and pay piles of income!

Harvey Jones is hugely impressed by 3 FTSE 100 dividend shares that have managed to deliver on two key fronts,…

Read more »

DIVIDEND YIELD text written on a notebook with chart
Investing Articles

9% yield! Is this one of the best dividend stocks to consider buying right now?

With signs the worst for it might be over, dividend investors should add B&M European Value to their lists of…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Down 26% in 3 months! What’s going on with the Alphabet share price?

Stock market investors sold off Alphabet (NASDAQ:GOOG) shares heavily yesterday. Is this a worry or a timely buying opportunity to…

Read more »

Queen Street, one of Cardiff's main shopping streets, busy with Saturday shoppers.
Investing Articles

Here’s why the Next share price is rising again today

The Next share price keeps climbing, but should investors like me consider buying? Roland Head looks at today’s news and…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

Up 850% in 3 years and the Rolls-Royce share price still won’t stop! See what the forecasts say now

Harvey Jones says Rolls-Royce shares continue to defy gravity. Yet this leaves investors facing a tricky decision over whether to…

Read more »

Artillery rocket system aimed to the sky and soldiers at sunset.
Investing Articles

Down 23% but with forecast annual earnings growth of 30%+ and new contracts just signed, should investors consider buying this FTSE 250 defence gem?

This FTSE 250 defence firm just signed two major new contracts, has excellent earnings growth prospects, and looks like a…

Read more »