Warren Buffett sells some Apple shares and adds more Chevron

Every market gives you a cycle to take advantage of, that’s for sure, and there will always be cycles to come. Warren Buffett has been quoted as saying that market timing can prove a futile endeavor for the average investor; obviously, he wasn’t talking about himself now that he’s been caught red-handed timing the cycle that will soon begin.

In the latest round of capital rotation of the investment giant Berkshire Hathaway NYSE: BRK.A, you can understand what Buffett himself thinks about the sectors that could outperform in the coming months; here’s a tip: include the file SPDR Technology Select Sector Fund NYSEARCA: XLK and the SPDR Fund Energy Select Sector NYSEARCA: XLE.

For reasons you’ll also learn today, Buffett has cut some of his paper earnings Apple NASDAQ: Apple shares, while simultaneously rotating some of this newfound liquidity into the promising story found in Chevron New York Stock Exchange: CVX for the next few months. It all starts with the cycle and the macro forces at play, and here they are.

Align your portfolio like this

Understand that the technology stocks sector may be a little overexposed today, especially after seeing names like this NVIDIA NASDAQ:NVDA Breaking all-time highs almost every month, investors like you may be looking for other sectors that may offer the opportunity to make further profits.

Spreading the performance of the last twelve months between the technology sector and the energy stocks that are at the opposite end, one can see that energy has underperformed by up to 45.3% over this period, raising the question of when the cycle will end and it will rotate. the other way.

That moment may come sooner than you think, now that the Fed is looking to cut interest rates this year, an event that could run as fast as May, according to the FedWatch tool. ECM Group NASDAQ: ECM. What happens if rates drop?

Because the value of money is tied to interest rate movements, the dollar index could fall if or when the Fed cuts rates. A lower dollar raises oil prices (good for Chevron) and decreases domestic consumption (alarming for Apple); so, Warren, is market timing as futile as it seems?

Even the analysts of The Goldman Sachs Group NYSE:GS have expressed their point of view towards the manufacturing sector, perhaps betting on the lower dollar triggering new demand for exports from the United States. They point towards an industry breakout, which of course includes Chevron as a prime member for rising profits.

A word of caution: This doesn’t mean you should dispose of all your Apple stock if you own any; Guys like Buffett may sell a stock just to rebalance their portfolio or to book some profits to reinvest in other more interesting trades.

Here are the reasons why – beyond macroeconomics – Chevron may be more attractive than Apple.

The only thing to chase

If there’s anything your portfolio should pursue in the next cycle, it’s growth, above-average growth. When it comes to Apple and its competitors, growth is a lacking factor considering today’s analyst projections, and the opposite is true for Chevron.

Looking at energy stocks as a whole, their earnings per share are expected to increase at an average rate of 7.1% over the next twelve months. Analysts believe Chevron shares could jump 14.6% to be above the industry average and higher than its closest competitor. Exxon Mobile NYSE:XOMwhich forecasts growth of only 8.3%.

At the opposite end of the spectrum are mega-cap tech stocks, whose earnings per share are expected to rise 11.2% over the next year, respectively; Apple ranks well below this average at just 8.4%; it also appears to fall short of its closest competitor Microsoft NASDAQ:MSFT which he expects to see 13.1%.

Knowing what you know now, it should come as no surprise to learn that Chevron – at its $180.9 price target – gives you 17.0% upside potential, while Apple comes in at just 12.6% along its upside targets. $205.3. The reason for this divergence? Well, you should be able to answer that by now.

So, as you see, Buffett gave you the initial hint, but it is the real expectations of the market and analysts that are literally confirming the thesis on where new growth can be found in the new upcoming cycle.

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