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The End of Silicon Valley – First Facebook, Now Apple Stock Collapse

At Classiarius, we produced a series of reports on mismanagement at Facebook with views on the stock imploding. We got lucky. Now have a look at Apple and its shocking sell-off. We see this stock breaking down as well.

It is no secret that Warren Buffet is a big fan of Apple stock, he has bought billions of dollars of it over the years. According to sources in the US press, the Sage of Omaha saw his profits fall $2.8 billion dollars in just a short period of time as Apple reported expectations of weakness in greater China because of the trade war with the US and the threat of global economic weakness.

The numbers here are staggering, especially if Apple continues to report weakness, this stock could be the next Facebook, now the poster child of censorship and poor management. Keep in mind that Facebook saw its stock fall more than 40 percent at one point with over 20 billion dollars in losses for its management team.

Apple saw its share price fall more than 7 percent, and this has had a negative impact on Berkshire Hathaway, the flagship company of Mr Warren Buffet. And the shocking number is this – Apple is Berkshire`s largest stock holding which is about 21 percent of its total portfolio. History tells us that this type of concentration of stock holdings in a portfolio can amount to massive profits or shockingly large losses in a short period of time, as Berkshire owns 252.5 million shares of Apple making his total position in the company worth $39.87 billion.

What was the trigger for the Apple collapse? Shares in this company went into a free-fall when the company announced it would lower its Q1 guidance (this is the number for expectations for future growth and earnings – in this case a slowdown expected), in a letter to investors from CEO Tim Cook on Wednesday. Of course, Mr Cook must give reasons and he blamed a variety of factors including the weakening economy in China and lower-than-expected iPhone revenue. Evidence points to a prolonged trade war with China (this is our view at Classiarius), and this spells long-term pain for Apple. Imagine another 10 percent breakdown. Imagine the billions of losses by investors. 

In a recent interview, Mr Buffet said, “we bought about 5 percent of the company. I`d love to own 100 percent of it…We like very much the economics of their activities and …We like very much the management.”

Is this the beginning of a protracted period of weakness for Silicon Valley names? If Warren Buffet turns his back on US tech, San Francisco home prices will collapse as waves of rich tech kids move to Texas, Arizona and Florida fleeing the devestation.

Team Classiarius



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