Perhaps the greatest lesson from Warren Buffet's most recent letter to Berkshire shareholders is that, to be wildly successful, you only have to be right sometimes:

In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so. In some cases, also, bad moves by me have been rescued by very large doses of luck.

Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years – and a sometimes-forgotten advantage that favors long-term investors such as Berkshire.

The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.

So-so decisions. Periodic moments of brilliance. And a long-term patient outlook. These are, I think, important things to keep in mind. It's okay to make mistakes; you just have to keep going.

At the beginning of this year – January 2nd to be exact – Apple revised its earnings guidance, downward. It was the first time in 15 years that the company had to do this. 

Tim Cook’s letter to shareholders, which can be found here, focuses a lot on China and its “economic deceleration.” But M.G. Siegler of 500ish Words believes that a greater pivot could be underway. His piece can be found here. It’s a good read.

Firstly, Apple’s current growth period is probably over. And secondly, the company is likely going to need to diversify away from high margin hardware/software sales and continue to grow its Services business (something that Microsoft has, ironically, already done).

Here is an excerpt from M.G. Siegler’s essay (Apple’s Precarious and Pivotal 2019):

The iPhone has simply been too good of a business. And it’s hard to see what tops it. Certainly in the near term. If Services is to carry Apple in the future, it will likely be only after years of relatively stagnant iPhone revenue growth mixed with a rising overall market. In other words, time and the broader world will have to catch up. And then Apple can have their “Microsoft Moment” — a services-based resurrection of growth.

As Tim points out in his letter, most of Apple’s Services revenue is tied to its installed base, as opposed to current period sales (also: less exposure to China). Last quarter that number was $10.8 billion – a new record.

So what we may see in the near future is the end of outright phone purchases and instead some sort of iPhone as a Service (or iPaaS). Pay Apple every month in perpetuity; always have the latest iPhone.

Of course, Apple has many other irons in the fire. Apple Watch has turned out to be a big business and the company is said to have 2,700 “core employees” working on its autonomous driving project. 

Maybe some of these businesses will also end up as Services.