Warren Buffett dumped Apple shares last year. That’s how much of his portfolio it currently makes up.

Additionally, Buffett famously does not rely on economic forecasts and does not make decisions based on where he thinks the economy is headed. The Berkshire boss is a long-term investor who has remained invested through far more difficult times than the one the economy is in today. Apple has now generated an impressive free cash flow of $109 billion over the last 12 months, a clear sign that the company is still doing phenomenally well.

For investors, there are some key takeaways from Buffett’s significant stock sales that are worth noting here.

First, it’s okay to sell a stock you like to lock in a profit. You don’t have to go all in on a stock or get out of it completely. If things are going exceptionally well, it could be a wise decision to sell a large portion of your holdings. This can minimize your risk if you fear a downturn.

Second, a more diversified portfolio can be beneficial during periods of high valuations. Had Berkshire’s portfolio still been heavily tilted towards Apple, it would have been more vulnerable to a market correction. Berkshire still isn’t particularly diverse, with so much of its portfolio spread across just four stocks, but it’s certainly more diverse than it was a year ago. It can be a risky situation to invest in a highly valued stock, no matter how much you love it.

After all, there’s nothing wrong with holding more money if you’re not sure what to invest in. Buffett often spoke in baseball terms about waiting for a pitch to hit your “sweet spot.” And that’s what I think Berkshire could do with its growing cash pile. It’s waiting for an opportunity, perhaps when there’s a sell-off in the market, to make not just any move, but a significant move on value stocks that are priced at a discount and offer a lot of upside potential. When investors have a strong cash balance, they can take advantage of big opportunities when a big opportunity presents itself.

Have you ever felt like you missed the boat when it came to buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts will provide one “Double Down” shaft Recommendation for companies that they think are about to collapse. If you’re worried you’ve already missed your investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: If you had invested $1,000 when we doubled in 2009, You would have $350,915!*

• Apple: If you had invested $1,000 when we doubled in 2008, You would have $44,492!*

• Netflix: If you had invested $1,000 when we doubled in 2004, You would have $473,142!*

Right now we’re issuing “Double Down” warnings for three incredible companies, and such an opportunity may not happen again in the near future.

See 3 “Double Down” Stocks »

*Stock Advisor returns from November 25, 2024

American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Apple, Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Warren Buffett dumped Apple shares last year. That’s how much of his portfolio it currently makes up. was originally published by The Motley Fool