8 Stocks Warren Buffett Should Never Buy

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8 Stocks Warren Buffett Should Never Buy

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8 Stocks Warren Buffett Should Never Buy

  1. 1. 8 Stocks Warren Buffett Should Never Buy
  2. 2. Apple (NASDAQ: AAPL)
  3. 3. Apple (NASDAQ: AAPL) • While Apple has tons of cash and trades at a very attractive valuation, the ever-changing dynamics of the computing industry would likely scare Buffett away • Will people still be using iPhones in 20 years? Maybe, but maybe not. The same goes for the rest of Apple’s products!
  4. 4. Tesla Motors (NASDAQ: TSLA)
  5. 5. Tesla Motors (NASDAQ: TSLA) • Warren Buffett generally invests in companies that have a steady track record of profitability and trade for reasonably low valuations • 2013 was Tesla’s first profitable year, and shares trade for 116 times this year’s projected earnings.
  6. 6. Amazon.com (NASDAQ: AMZN)
  7. 7. Amazon.com (NASDAQ: AMZN) • Even though Amazon’s sales are nearly $75 billion per year, the company managed less than $300 million in earnings last year. • Shares trade for more than 550 times TTM earnings, despite a very inconsistent history of profitability
  8. 8. Netflix (NASDAQ: NFLX)
  9. 9. Netflix (NASDAQ: NFLX) • Netflix operates in a very competitive segment, and it remains to be seen whether the company’s business will be able to compete with other “streaming” services • Netflix doesn’t have a clear competitive advantage, which is an absolute must for a Buffett investment
  10. 10. Annaly Capital Management (NASDAQ: NLY)
  11. 11. Annaly Capital Management (NYSE: NLY) • Annaly and the other mortgage REITs are simply too highly levered for Buffett’s taste • The high leverage leaves the companies very sensitive to interest rate fluctuations • Buffett would be more likely to purchase shares of REITs that own actual properties
  12. 12. Facebook (NASDAQ: FB)
  13. 13. Facebook (NASDAQ: FB) • Buffett and his right-hand man Charlie Munger have publicly stated they would never invest in Facebook, but wouldn’t bet against it either • Munger has even gone so far as to say that he despises the very idea of Facebook, calling it “counterproductive”
  14. 14. Chipotle Mexican Grill (NYSE: CMG)
  15. 15. Chipotle Mexican Grill (NYSE: CMG) • Although Chipotle has been the growth rockstar of the “fast-casual” dining sector, the stock still trades at a very high P/E ratio and is far too volatile for Buffett’s taste • The restaurant business is just too difficult to sustain a high profit margin in after growth slows
  16. 16. Bitcoin
  17. 17. Bitcoin • Even though it’s not a stock, Bitcoin definitely is one investment we’ll never see Warren Buffett make • Buffett has called the Bitcoin infatuation a “mirage”, calling it no more revolutionary that writing a check or sending a money order
  18. 18. The Greatest Thing Warren Buffett Ever Said
  19. 19. Photo Credits • Apple Ipad – Randolf Jorberg • Tesla Roadster – flickr/cytech • Amazon.com – flickr/torley • Chipotle – wikipedia/proshob • Bitcoin – pixabay/Dry2

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