← Money Rehab with Nicole Lapin
Money Rehab with Nicole Lapin
What Warren Buffett Is Buying, Selling… and Whether You Should, Too
00:11:47
Loading summary
Transcript3 lines
- [00:00]
Nicole Lapin
So one of my girlfriends fell in love with this house and she was sure she could afford it. She had the down payment, she had the income. But when it came to pull her credit for her mortgage, oh, it was a brutal wake up call. It sounds so obvious, but it hadn't really hit her until that moment. Her day to day spending habits weren't just keeping up with the Joneses, they were affecting her future. So she came over, we talked about it, we did some credit hygiene and if you need some of this too, I've got something that might help Chime With Chime's Secure Credit Builder Visa Credit card you can build your credit history with everyday purchases and regular on time payments. There are no credit checks, no annual fees and no interest. Just a smarter way to build credit using the money you set aside. Plus you get access to credit tracking tools and personalized tips. So the process feels way less overwhelming. Make everyday purchases count with Chime Secured Credit Builder Visa Credit Card get started today@chime.com MNN With Chime secured Credit Builder Visa Credit card you can build your credit history with everyday purchases and regular on time payments. Just visit chime.commnn as in money News Network to get started.
- [01:10]
Morgan Lavoy
The Time Credit Builder Visa credit card is issued by the Bankrupt bank and Air Straight bank and a Chime checking account required to apply. Money added to Credit Builder will be holding your secured deposit account as collateral and your credit builder cards available to spend amount. This is money you can use to pay off your monthly charges out of network. ATM withdrawal and otc. Advance fees may apply. Late payment may negatively impact your credit score. Results may vary. Go to chime.com disclosures for details.
- [01:24]
Nicole Lapin
I'm Nicole Lapin, the only financial expert. You don't need a dictionary to understand it' Some money rehab. So Warren Buffett is the greatest investor of all time. And sometimes when people set up investing coaching calls with me, they said shouldn't I just invest like Warren Buffett? I mean, it's a fair question. The man has turned Berkshire Hathaway from a dying textile mill into a trillion dollar powerhouse. His track record, an average 20% annual return over six freaking decades. That is not just impressive, that is historic. That's why he's been given the cheesy nickname he has, the Oracle of Omaha. Basically, he's the investing goat. So tracking his moves can be really smart. Today I'm going to dig into what Warren is buying, what he is selling and what it means for your wallet. Before we get into his trades, let's Quickly talk about his core investing philosophy. It boils down to these three things. Buy great companies at fair prices. Hold them forever or close to it. Avoid hype, noise and anything you don't understand. That's it. Buffett isn't out there chasing meme stocks or flipping day trades. You don't see a headline about him investing in GameStop. Right, because he definitely didn't. He is out there hunting for undervalued cash flow generating businesses with economic moats. Think dominant brands, loyal customers, big pricing power. So what is the Oracle up to now? Let's start with the exits. Buffett. Buffett has been steadily unloading bank of America stock. In fact, over three straight quarters, he has sold nearly 40% of Berkshire Hathaway's position. Now this isn't a 180. Bank of America is still one of Berkshire's top holdings. But here's what's going on. BofA is very sensitive to interest rates. When the Fed was jacking up interest rates, B of A was raking it in. But now, with cuts looming, future earnings might not be so rosy. Also, the stock has gotten really pricey. When Buffett first got in back in 2011, bank of America was trading at a 62% discount to its book value. Today it's sitting at a premium. So basically he got in on clearance and now it's full retail. And there's another angle. At Berkshire's 2024 shareholder meeting, Buffett hinted that locking in gains now might be smart if corporate tax rates increase. If you're an OG listener, you might remember that I talked about that back then. So this might just be about cashing out at a tax effic moment. Here's another one. Buffett has sold off two thirds of his Apple stake. This has been pretty crazy to watch because Apple was once the MVP of Berkshire's portfolio. Now he is still holding 300 million shares. It is not a breakup by any means. It's more of a conscious uncoupling. But still, why sell at all? I see three reasons. Number one, flat growth. Apple's product sales, iPhones, Macs, iPads have been stagnant or declining. Service revenue is growing, but overall earnings basically flat for the past three years. Second thing, taxes. Again, locking in rates while the corporate tax rate is still favorable makes a lot of sense. And third, valuation. Apple's trading at a forward PE ratio of around 33. For Buffett, that is rich, especially for a company no longer in hypergrowth mode. And just as a quick aside, a PE ratio stands for price to earnings ratio. And it's one of the most common ways investors measure how expensive a stock is. You take the current stock price and divide it by the company's expected earnings per share. The equation isn't so important. I mean it has been on my previous finance exams. But the key thing is what it represents. The higher the P E ratio, the more investors are paying for each dollar of profit. A high PE can mean a company has strong growth potential or it can mean the stock is overpriced and due for a reality check. For context, companies that are considered value stocks, not growth stock companies tend to have lower P E ratio. Verizon stock for example, has a PE ratio of about 10. Meanwhile, a high growth tech darling like Nvidia, it has a forward PE of over 50. So when Apple is sitting here at 33, it's a weird, weird middle ground. Priced more like a growth stock but behaving more like a mature one. It's a little funky. Now, Apple is still a giant in Berkshire's portfolio, but it's not the growth engine it once was. And Buffett is recalibrating accordingly. All right, so that is what Warren Buffett is ditching. Let's talk about the two big ones he is buying and why. First up, Domino's Pizza. Buffett has been quietly piling into Domino's for 3/4 now. As of Q1 of 2025, Berkshire holds over 2.6 million shares. So why? Well, Domino's is a global brand with strong unit economics, smart tech investments and a relentless on operational efficiency. I know we don't think about tech when we think about dominoes, but the brand has made AI a key part of its strategy. Predicting online orders, analyzing customer feedback, even inspecting pizza orders with computer vision. Seriously. They have also shown some impressive consistency. International locations have posted 31 consecutive years of same store sales growth. That is wild sauce. Pun intended. Buffett is likely betting that Domino's will continue to eat market share from competitors like Papa John's and Pizza Hut. And that its five year growth strategy that they're calling Hungry for More will keep the brand firing on all cylinders. I will say this thing is not cheap. The stock's PE ratio is 27, which is not too far away from Apple's. But Buffett's clearly comfortable paying a premium for predictability and brand power. And next up we we have Sirius xm. This one might surprise you, but it really shouldn't because Sirius XM is basically a legal monopoly in satellite radio. Sure it has competition from terrestrial radio and streaming platforms. But little known fact is that it is the only company licensed to run satellite radio in the United States. And unlike ad dependent media companies, Sirius XM generates most of its revenue from subscriptions. That means more stable cash flow, especially during economic downturns. Also, its fixed costs stay stable as the subscriber base grows, which means expanding profit margins. In other words, this checks all of Warren's boxes. Brand moat, steady cash flow, Value pricing Check, check, check. He has been scooping up shares since last September. In the last six months alone, Berkshire added over 14 million shares, bringing the total stake to nearly 120 million shares. That's more than 35% of the company. So let's return to the million dollar or should I say billion dollar question here. Should you follow Warren's moves? Let me just say this clearly. Blindly copying anyone's trades. Yes, even Warren Buffett's is not a strategy. Plus he's playing a completely different game than we are. He is managing hundreds of billions of dollars and has access to deals that you and I will never but understanding what why he makes the moves he does. That is the secret. So let's zoom out on the evergreen takeaway that will work today, will work tomorrow, and will work always. Number one, look for durable businesses with pricing power. This is the Domino's and Sirius XM model. Number two, Valuation matters. Buffett's out on Apple and B of A partly because they got too expensive. Number three, never forget about Uncle Sam. Our least favorite Uncle Buffett is selling now potentially to lock in lower capital gains rates. Number four, cash flow is queen. Fine, it is king too. It is king and queen. Businesses that can self fund and reward shareholders via dividends or buybacks are like crack for Buffett. He probably wouldn't describe it that way, but you know he's thinking it. And as always, please do your homework, consult your financial advisor and just invest like you. Not like someone you read about or even someone you listened to on a podcast. And as always, do your homework, consult your financial advisor and invest like you, not like someone you read about. But that said, keep watching Buffett. I mean the man is 94 years old. He is still sharp as ever and he is still schooling Wall Street. Honestly, I'm taking notes. Also Warren, if you're listening or if anyone who's listening knows him. Open invite any day, anytime. Money Rehab. I'll even meet you at Domino's. And I hate Domino's, but I'll love it for you. For today's tip, you can take straight to the Bank. Here's one more lesson from Buffett. The waiting game is a valuable play on Wall Street. Buffett has been a net seller of stocks for 10 straight quarters now. Yes, I am counting. Sometimes the best move is sitting on your hands until the right pitch comes along and knowing when to take your wins. Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some Money Rehab? And let's be honest, we all do. So email us your money questions moneyrehaboneynewsnetwork.com to potentially have your questions answered on the show or even have a one on one intervention with me. And follow us on Instagram at Money News and TikTok MoneyNews Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.