We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Value Trader Highlights: International Business Machines, Bank of America, Amazon.com, Chevron and Apple
Read MoreHide Full Article
For Immediate Release
Chicago, IL – April 9, 2024 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2252022/3-biggest-value-investing-mistakes)
3 Biggest Value-Investing Mistakes
Welcome to Episode #363 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Everyone makes mistakes in investing, even the world's greatest living investor, Warren Buffett. He's been investing for over 80 years so there are bound to be a few blow ups along the way.
What can we learn from his biggest mistakes?
3 Biggest Value Investing Mistakes
1. Buying in a difficult industry where there are few moats
2. Holding the company too long, even when the business has changed or its not performing
3. Buying an expensive stock
Buffett's Hits, Misses and Mistakes
1. International Business Machines Corp. (IBM - Free Report)
Berkshire Hathaway first bought shares of IBM in 2011 around $170 a share. By 2018, Berkshire had sold out of the investment in the range of $140 to $150. Berkshire took a loss.
Buffett later said IBM wasn't performing as he thought it would and that's why he got out. But it took him 8 years to finally exit the position completely. During that period, IBM's earnings fell year-over-year in 2014, 2015 and 2016 with little rebound in 2017 and 2018.
Should Buffett had sold earlier when falling earnings became more than just a 1-off at IBM?
Berkshire Hathaway first bought Amazon shares in the first quarter of 2019. It's a small position in the equity portfolio. At the time, many were confused by the purchase because Amazon sported a sky-high P/E ratio and didn't seem to be a traditional "value" stock.
Amazon is cheaper now, with a forward P/E of 44. Earnings plunged in 2022, but they have been rebounding. In 2023, Amazon made $2.80 per share and the Zacks Consensus is looking for $4.08 in 2024.
Shares are up 105.2% since the last day of the first quarter of 2019 through Apr 2, 2024. That's beating the S&P 500, up 84.4% during the same time.
Was Amazon too expensive when Buffett bought it in 2019?
Berkshire Hathaway first bought shares of Chevron in the fourth quarter of 2020 and then bought a bigger position in 2021. At the time, Chevron was dirt cheap on a fundamental basis. It remains cheap, with a forward P/E of 12.
Chevron shares are up 90.3% since the last day of the fourth quarter of 2020. That easily beats the return of the S&P 500 during that same time of 39.1%.
Does it pay to buy the dirt-cheap stocks like Chevron over the long term?
Berkshire Hathaway first bought shares of Apple in the first quarter of 2016. It has since become a cornerstone of the Berkshire business and is the largest position in the equity portfolio.
Shares are no longer cheap, however. When Berkshire originally bought, Apple was trading around 10x forward earnings. It is currently trading at 25.8x. But earnings growth has stalled out the last few years.
Apple made $6.11 in fiscal 2022 and $6.12 in fiscal 2023. It's expected to see some growth in fiscal 2024 as the Zacks Consensus is looking for $6.55.
Is Apple flashing the warnings signs that maybe it's business is changing?
What Else Do You Need to Know About Learning from Buffett's Investing Mistakes?
Tune into this week's podcast to find out.
[In full disclosure, Tracey owns shares of AMZN and CVX in her personal portfolio.]
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
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.
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 https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Value Trader Highlights: International Business Machines, Bank of America, Amazon.com, Chevron and Apple
For Immediate Release
Chicago, IL – April 9, 2024 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2252022/3-biggest-value-investing-mistakes)
3 Biggest Value-Investing Mistakes
Welcome to Episode #363 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Everyone makes mistakes in investing, even the world's greatest living investor, Warren Buffett. He's been investing for over 80 years so there are bound to be a few blow ups along the way.
What can we learn from his biggest mistakes?
3 Biggest Value Investing Mistakes
1. Buying in a difficult industry where there are few moats
2. Holding the company too long, even when the business has changed or its not performing
3. Buying an expensive stock
Buffett's Hits, Misses and Mistakes
1. International Business Machines Corp. (IBM - Free Report)
Berkshire Hathaway first bought shares of IBM in 2011 around $170 a share. By 2018, Berkshire had sold out of the investment in the range of $140 to $150. Berkshire took a loss.
Buffett later said IBM wasn't performing as he thought it would and that's why he got out. But it took him 8 years to finally exit the position completely. During that period, IBM's earnings fell year-over-year in 2014, 2015 and 2016 with little rebound in 2017 and 2018.
Should Buffett had sold earlier when falling earnings became more than just a 1-off at IBM?
2. Bank of America (BAC - Free Report)
Berkshire Hathaway bought Bank of America in the third quarter of 2017. It still owns a big position.
Earnings at Bank of America popped during the pandemic, rising to $3.56 in 2021 from $1.87 in 2020. But earnings are expected to fall this year by 9%.
Bank of America is still cheap with a P/B ratio of just 1.1.
Is Buffett making a mistake in still holding Bank of America?
3. Amazon.com, Inc. (AMZN - Free Report)
Berkshire Hathaway first bought Amazon shares in the first quarter of 2019. It's a small position in the equity portfolio. At the time, many were confused by the purchase because Amazon sported a sky-high P/E ratio and didn't seem to be a traditional "value" stock.
Amazon is cheaper now, with a forward P/E of 44. Earnings plunged in 2022, but they have been rebounding. In 2023, Amazon made $2.80 per share and the Zacks Consensus is looking for $4.08 in 2024.
Shares are up 105.2% since the last day of the first quarter of 2019 through Apr 2, 2024. That's beating the S&P 500, up 84.4% during the same time.
Was Amazon too expensive when Buffett bought it in 2019?
4. Chevron Corp. (CVX - Free Report)
Berkshire Hathaway first bought shares of Chevron in the fourth quarter of 2020 and then bought a bigger position in 2021. At the time, Chevron was dirt cheap on a fundamental basis. It remains cheap, with a forward P/E of 12.
Chevron shares are up 90.3% since the last day of the fourth quarter of 2020. That easily beats the return of the S&P 500 during that same time of 39.1%.
Does it pay to buy the dirt-cheap stocks like Chevron over the long term?
5. Apple Inc. (AAPL - Free Report)
Berkshire Hathaway first bought shares of Apple in the first quarter of 2016. It has since become a cornerstone of the Berkshire business and is the largest position in the equity portfolio.
Shares are no longer cheap, however. When Berkshire originally bought, Apple was trading around 10x forward earnings. It is currently trading at 25.8x. But earnings growth has stalled out the last few years.
Apple made $6.11 in fiscal 2022 and $6.12 in fiscal 2023. It's expected to see some growth in fiscal 2024 as the Zacks Consensus is looking for $6.55.
Is Apple flashing the warnings signs that maybe it's business is changing?
What Else Do You Need to Know About Learning from Buffett's Investing Mistakes?
Tune into this week's podcast to find out.
[In full disclosure, Tracey owns shares of AMZN and CVX in her personal portfolio.]
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://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
support@zacks.com
https://www.zacks.com/performance
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 https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.