Rob Gronkowski scored big with a $69,000 bet on Apple stock—how his strategy mirrors Warren Buffett’s
Future hall-of-fame tight end Rob Gronkowski says he bought $69,000 worth of Apple stock in 2014 based on advice from a contractor working on his Foxborough, Massachusetts, home, reports Fortune.
"I [had] never been involved in stocks," Gronkowski said. "I really didn't know how stocks work. So I was like, 'All right, let me do this, man.'"
After selling some shares along the way, Gronk says his Apple stake is currently worth more than $600,000.
To some observers, Gronk's story looks a lot like dumb luck. It's hard to argue with the results, though. And if you dig a little more into the process, Gronkowski's trade starts to look similar to that of another famous Apple investor: Warren Buffett.
Why Gronk's strategy is Buffett-like
Would the chairman of Berkshire Hathaway ever invest in a company without doing exhaustive research, let alone on the advice of a contractor? Unlikely. But Berkshire's purchase of $31 billion of Apple stock in 2016 wasn't Buffett's idea. The self-described luddite greenlit Berkshire's purchase on the advice of lieutenant Ted Weschler.
It's possible that both Gronk and Buffett recognized that Apple had become a ubiquitous company with a product — the iPhone — that inspired enormous loyalty among customers. It's a quality of the business Buffett has consistently touted since.
Money Report
"Apple has a position with consumers that they're paying $1,500 or whatever it may be for a phone, and these same people pay $35,000 for a second car," Buffett said at Berkshire's 2023 shareholder meeting. "And if they had to give up their second car or give up their iPhone, they'd give up their second car!"
Was Gronk thinking that deeply about it back in 2014? Probably not. But he may well have recognized that Apple was a strong business with an industry-leading brand.
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Buffett is one of the greatest-ever investors, while Gronk has a propensity for absent-mindedness. That's perhaps why, after making his investment, he forgot about his Apple shares for two and half years. By the time he remembered where he'd stashed the money, his investment had grown to more than $250,000.
That's certainly not Buffett-like behavior, but it's not far off from the Oracle of Omaha's advice for everyday investors. While he generally recommends that regular people own low-cost, diversified index funds, he says that those who do invest in individual stocks would be wise to hold them over long periods without paying attention to their day-to-day movements.
"You shouldn't buy stocks unless you expect...to hold them for a very extended period and you are prepared financially and psychologically to hold them the same way you would hold a farm, and never look at a quote," Buffett said at the 2020 Berkshire meeting. "You don't need to pay attention to them."
Buffett's reasoning here is straightforward. Monitoring the ups and downs of a particular stock can lead you to make emotional decisions driven by short-term thinking. You're better off, he says, owning a great company over a long period.
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