No. of Recommendations: 42
Calling it straight up: this is outcome bias in its purest form.
You’re judging a past risk-management decision using today’s price chart. That’s not investing — that’s hindsight bravado.
Apple had grown to over 40% of Berkshire’s entire equity portfolio. That level of single-stock concentration is extreme for any investment vehicle, let alone one managing hundreds of billions. Apple had already exceeded any reasonable expectation of appreciation. Trimming it wasn’t “being wrong,” it was basic fiduciary discipline.
And let’s ground this in reality: Apple remains the anchor of Berkshire’s portfolio. Berkshire is still the largest owner of Apple stock on Earth — by a staggering margin. Apple dwarfs every other equity position Berkshire has ever held, by tens of billions. And even today, at roughly 23% of the total portfolio, Apple is a larger percentage holding for Berkshire than for any major fund, ETF.
But apparently that’s not good enough, because you have real-time quotes and can see that Apple happened to keep rising after the trim — therefore no risk ever existed, right?
By that standard, I suppose you’re also disappointed every year your home doesn’t burn down, because you “wasted” money on insurance. Of course it didn’t burn down — you should have known that in advance, right?
For what it’s worth, the probability of Apple declining meaningfully in the next year is far higher than the probability of your house burning down.
How are you positioned?
