7 Investments That Will Make or Break Warren Buffett in 2019

Investors have had to endure a lot of stock market volatility as 2018 turned into 2019. The selling pressure of December, for the worst year-end performance since the Great Depression of the 1930s, was followed with more volatility at the start of 2019. Some investors are worried that the big moves are showing no signs of quieting down.

Many investors start to seek safer investments during times of uncertainty. Sometimes that is in large defensive stocks, and sometimes it is following the picks of the great market wizards. Warren Buffett has been crowned the greatest investor of the modern era. After all, if you have become the world’s wealthiest person then maybe you know a thing or two.

Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) held roughly $207 billion worth of public stocks at the end of September 2018. The stock market slide has negatively affected that huge amount to the tune of billions of dollars. In fact, Berkshire Hathaway’s recent share price of around $295,000 was down 12% from its peak value in 2018 — well over $50 billion in lost market value.

24/7 Wall St. has looked over the top investments of Warren Buffett and his team of portfolio managers for a 2019 outlook. Just seven of these big investments (Buffett has dozens of stocks owned by Berkshire entities) are the so-called make-or-break stocks for how his gains and losses go in 2019. More importantly, these seven likely will be the largest influence on Buffett’s own top metric covering the tangible book value.

We have looked at the prospects for each company based on the end of 2018 and start of 2019, using consensus analyst price targets from Thomson Reuters. Color also has been added on each of these positions, along with a look at just how much the stock market’s drop has hurt the value of each position in a very short time.

American Express

American Express Co. (NYSE: AXP) has been the same 151.6 million share stake as it has been for years. Make that decades now. This was a $16.1 billion stake in Berkshire Hathaway’s latest quarterly earnings report. Upon closing out 2018 at $95.32 a share, this stock was actually down 4% from a year earlier.

One issue that may have kept pressure on Amex in 2018, outside of the overall plunge in financial stocks, was that its shares had gained a surprising 34% in 2017. Gains of that size tend to rob future gains. Amex ended 2018 with an analyst consensus target price of $114.94 and an implied gain of about 20% ahead, or 22% if you include its 1.6% dividend yield.

Berkshire Hathaway continues to remain the anchor shareholder for American Express. Its 17.6% stake is nearly three times the size of Amex’s second largest shareholder (Vanguard).

As for the 2019 outlook, Amex needs to make certain its clients do not see eroding credit metrics with delinquencies and charge-offs. Oddly enough, the consensus target price was less than 0.4% above Amex’s 52-week high.

The Mighty Apple

Apple Inc.  (NASDAQ: AAPL) reached the world’s largest company status and managed to hit the $1 trillion valuation in 2018. But after analysts piled on in an effort to lower iPhone expectations in November and December, Apple CEO Tim Cook announced after the first trading day of 2019 that the company’s sales were going to be handily lower than expectations.

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