By the end of 2015, Apple’s brand was known the world over.
There were over 500 million iPhone users worldwide.
Its products were simple, easy to use and addicting. Once you used one Apple product, you were hooked.
So, unless you were living under a rock in 2016, you had to know that Apple was a great business.
And in the first quarter of 2016, Buffett bought $7 billion of Apple’s shares.
His purchase raised eyebrows. For years, he had shied away from technology. Now, he was going all in.
By 2018, Buffett’s Berkshire Hathaway owned 5% of Apple’s business at a cost of $36 billion.
This week, Apple became the first company to be worth $3 trillion. And his stake in Apple is now worth more than $160 billion.
Including the $770 million in average annual dividends he gets, that’s a sevenfold increase in around five years.
But buying Apple was only part of Buffett’s genius. It’s what he did next that made all the difference…
The road to $160 billion wasn’t straight up. It was anything but…
Along the way, Mr. Market tries everything in his power to get you to give up your position.
During the first year that Buffett owned Apple, the stock only matched the S&P 500’s 12% return.
Most investors would’ve sold out and moved on to buy artificial intelligence, 5G or biotech stocks, which were the latest craze.
Not Buffett. He stubbornly held his shares.
Then, in 2019, Apple’s share lost more than one-third of its value, 36%. And again in 2020, shares sank more than 26%.
Did Buffett panic and sell? Not a chance.
In the case of Apple, Buffett’s superpower wasn’t just identifying a great business.
It was having the proper mindset. That is what makes all the difference.
Because if you don’t have the right mindset, you’ll grow bored and sell when the stock price does nothing … or sell your position when the stock price drops.
Heck, you could give investors next year’s stock prices and they would still find a way to lose money if they don’t have the proper mindset.
So, here’s the Real Talk about stock investing…
The 3 C’s
If you don’t have the three C’s — being calm, confident and in control — when Mr. Market tries to make you sell your shares, invest in Treasury bills.
Yes, they’ll yield you less than 0.50% a year. But you won’t freak out about losing money.
Double- and triple-digit returns are reserved for those investors who have the right mindset.
So, if you don’t get this, you don’t deserve the great returns the stock market offers to the patient investor…
You can’t go swimming without getting wet.
You can’t have May flowers without April showers.
And you can’t invest in stocks without seeing their prices go down at some point.
That’s just the way it is.
You need to have the three C’s in order to make great returns.
And this year, I’ve put together a plan to show you how to make these types of returns.
When I share it with you tomorrow, you’ll have no problem battling the S&P 500 and winning.
Founder, Alpha Investor