Apple Retreats to Rare, Long-Term Value Zone

Charlie Munger’s Strategy: Buy Quality Stocks at the 200-Week MACharlie Munger’s Lessons to BuffettWarren Buffett is widely regarded as the most prolific and successful value investor of all time in most Wall Street circles. However, Buffett did not achieve success on his own. His best “investment” decision was probably his teaming up with Charles Munger. Munger, who passed away in November 2023 at 99 years old, was Buffet’s best friend and was full of comedic charm, wisdom, experience, and investment knowledge until the day he died.Did Buffett and Munger Use Technical Analysis?One of my favorite quotes, especially regarding investing, is “Simplicity is the ultimate sophistication.” Having tried nearly every indicator under the sun and multiple investing strategies over my years of investing, I have learned that successful investing is more about removing clutter and focusing like a laser on what really matters.While I would label my own personal investing framework as a trend-following growth investor, I would never discount Buffett and Munger’s success, and I discovered an old Munger quote that resonates with me:“If all you ever did was buy high-quality stocks on the 200-week moving average, you would beat the S&P 500 by a large margin over time.”The reason the quote resonated with me so strongly is because I have been utilizing this strategy for long-term investments for years, without seeing the quote. Though you and I will never be able to dig into a company balance sheet like Munger and Buffett, we can utilize some of these words of wisdom to make us better investors. While Buffett and Munger are known chiefly for their deep fundamental analysis, the Munger quote suggests that the two investing legends use very long-term technical analysis to their advantage.Apple Has Held the 200-Week for Two DecadesUp until chip king Nvidia (NVDA) arguably took the throne recently, Apple (AAPL) had been the “true market leader” for two decades. The stock became so popular with investors that if a hedge fund or mutual fund did not have it on its book, it was looked at as a negative.Nevertheless, though the stock and company have produced incredible performance, they were still beholden to market forces and gravity. Regardless of how strong a stock is, eventually, its valuation gets too bloated or a market correction occurs (remember, 75% of a stock’s move is attributed to the general market’s direction). Below is a long-term weekly chart of AAPL versus its 200-week moving average.Image Source: TradingViewEarlier this week AAPL tagged the 200-week and bounced viciously. Though the stock only touches the moving average once every four or five years, the long-term results are incredible. Even in the depths of the worst financial crisis in a century (The Global Financial Crisis of 2008) the 200-week MA contained AAPL shares.Apple’s Valuation is AttractiveAfter the “DeepSeek” and tariff-related correction, Apple’s price-to-book ratio has become much cheaper, dropping from over 65x to ~44x today.Image Source: Zacks Investment ResearchApple: Addressing Tariffs ConcernsYesterday, the Trump Administration announced a 90-day pause on its harsh tariffs on the Chinese. This is good news for AAPL obviously, and luckily, we were in before it hit. In addition, investors are likely discounting the fact that many clients bought with fears of higher prices, thus frontloading revenue.Bottom LineAll stocks eventually succumb to gravity, and Apple is no different. However, yesterday, the stock retreated to a level that has held for more than two decades. 7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks