Apple Stock - Seems great, right?

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Shabber
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Apple Stock - Seems great, right?

Post by Shabber »

OK, I am not trying to get Bogleheads mad by talking about individual stocks, but I have $10k of my portfolio that I play around with individual stocks on.
Apple seems amazing to me. 2.34% Dividend, P/E Ratio of 10, Innovative company with products that work well, took a 22% hit in the last 12 months so you are buying low.
Who's in?

- Chris
WendyW
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Re: Apple Stock - Seems great, right?

Post by WendyW »

You are correct in suggesting that this is not a Boglehead topic.

I try to stay clear of stocks that get whipsawed by the sentiment of amateur stockpickers.

Balaji makes some valid points here...
http://www.forbes.com/sites/quora/2013/ ... ling-down/
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stevewolfe
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Re: Apple Stock - Seems great, right?

Post by stevewolfe »

Shabber wrote:Who's in?
- Chris
I own some in TSM and T. Rowe Price Capital Appreciation. No need for more than that. A lot of my friends are buying Android phones to replace their iPhones. We bought a Google Nexus 7 instead of an iPad. I'm not sold that they have a juggernaut that can't be overcome.
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Re: Apple Stock - Seems great, right?

Post by WendyW »

I may invest in a Samsung Galaxy S4....

Image
Grt2bOutdoors
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Re: Apple Stock - Seems great, right?

Post by Grt2bOutdoors »

Compared to what?

I'm actually more interested in International's right now. That dividend yield of 3% looks very appetizing. :greedy
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John3754
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Re: Apple Stock - Seems great, right?

Post by John3754 »

Yeah, seems great until it goes down another 22% in the next 12 months, then what do you do?
Occupier
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Re: Apple Stock - Seems great, right?

Post by Occupier »

Great is a relative concept. When Apple was the company with the largest capitalization in the world - it's down 20% since then. I thought Apple has a campus in Silicon valley and a factory in China and a few rented stores. Exxon has refineries, oil fields, tankers, gas stations all over the world. That sure seemed like Apple was overvalued. It still is. Dave
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Re: Apple Stock - Seems great, right?

Post by NYBoglehead »

Why is it necessarily "buying low?" There is no floor below which Apple cannot fall. A lot of people were saying "Apple's gonna break $1,000" when it was at $700 and obviously the stock has been a disaster since the highs.

The dividend yield is attractive but beware the value trap. The yield will go even higher if the stock price falls further. Apple did a great job of innovating but it appears their competitors are figuring out how to breach the market. The iPhone was such a smashing success because it was a departure from how everyone did things, now a ton of people have smartphones and coming out with a "new" one that doesn't do that much more than the previous version isn't going to be the juggernaut that the iPad was when it first came out.

Its also kind of crazy that with $137 billion in cash on the books they can't figure out what to do with it.

I wish you luck, but as another poster mentioned I am content to own Apple within TSM and nothing more.
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Re: Apple Stock - Seems great, right?

Post by WendyW »

NYBoglehead wrote:Its also kind of crazy that with $137 billion in cash on the books they can't figure out what to do with it.
To be fair, Apple is doing a better job of investing their emergency fund than most of us Bogleheads are.
NYBoglehead
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Re: Apple Stock - Seems great, right?

Post by NYBoglehead »

WendyW wrote:
NYBoglehead wrote:Its also kind of crazy that with $137 billion in cash on the books they can't figure out what to do with it.
To be fair, Apple is doing a better job of investing their emergency fund than most of us Bogleheads are.
I suppose that disputable. Keep excess cash on the books that isn't earning anything is gradually watching purchasing power erode. Tim Cook made something like $300 million last year, I guess if he only got $250 he would have walked! (I kid.)

Kodak invented the first digital camera. We all know how they turned out. Being first to the market doesn't guarantee success in perpetuity.
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Re: Apple Stock - Seems great, right?

Post by EyeYield »

For 50 years this was the standard all across the US, until it wasn't.
http://upload.wikimedia.org/wikipedia/c ... C_1902.jpg
Bad example actually, since they went on to make automobiles; until they didn't.
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Re: Apple Stock - Seems great, right?

Post by leonard »

I have some as part of TSM.
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Re: Apple Stock - Seems great, right?

Post by Jfet »

Nokia seemed great and a great investment in a leader in the early 2000s

I think it peaked at around $60 a share then.

Might want to check the current price before you sink a lot into Apple. Just sayin.
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pennstater2005
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Re: Apple Stock - Seems great, right?

Post by pennstater2005 »

If 10k is only a small portion of your overall portfolio, go for it.
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Re: Apple Stock - Seems great, right?

Post by hicabob »

pennstater2005 wrote:If 10k is only a small portion of your overall portfolio, go for it.
I agree, go for it - individual stock portfolios make a more interesting hobby than index portfolios - I'm at about 30% individuals and 70% indexes in my equity portfolio.
McCharley
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Re: Apple Stock - Seems great, right?

Post by McCharley »

Hi, Chris,

I, too, dabble in individual stocks and do not think it is necessarily un-Boglehead. This forum focuses mostly on simple index fund portfolios (the Three Fund Portfolio is great IMHO) but somehow this doesn't free us from being somewhat obsessive about investments.

AAPL is 3% of SPY (SP500 index). Why overweight what you already have? Frankly, this stock is a little boring for your investing "fun money." (Which I assume this is: not a significant part of your portfolio!) :greedy

I used to own AAPL and sold it when they screwed up maps. :annoyed

I find that investing in individual stocks encourages savings. :beer
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Re: Apple Stock - Seems great, right?

Post by Chan_va »

Shabber wrote:OK, I am not trying to get Bogleheads mad by talking about individual stocks, but I have $10k of my portfolio that I play around with individual stocks on.
Apple seems amazing to me. 2.34% Dividend, P/E Ratio of 10, Innovative company with products that work well, took a 22% hit in the last 12 months so you are buying low.
Who's in?

- Chris
Everything you say may be true, but Appl is the most analyzed company on the planet. So, whatever info is out there is factored into the current price. Sure buy Appl, but don't kid yourself that you are buying it for any rational reason.

What I would do with 10k of play money is look for a small company that is undervalued and potentially will grow big. And sell it when it does to others who catch on late. And do it with a few companies like that to hedge my bets.

Wait there is an index fund for that- small cap value :happy
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Average Investor
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Re: Apple Stock - Seems great, right?

Post by Average Investor »

WendyW wrote:I may invest in a Samsung Galaxy S4....

Image
Fwiw, that picture shows an iPhone 3 model which debuted nearly 4 years ago . . . .
Tomorrow never knows.
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Re: Apple Stock - Seems great, right?

Post by Toons »

"$10k of my portfolio that I play around with individual stocks on."

I say have fun and play,buy whatever you like,it is your money.
I did the same think many years ago,played with some money and bought Mcdonalds,
Coke and Walmart.life is short have fun. :happy
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Re: Apple Stock - Seems great, right?

Post by nisiprius »

Shabber wrote:Apple seems amazing to me. 2.34% Dividend, P/E Ratio of 10, Innovative company with products that work well, took a 22% hit in the last 12 months so you are buying low.
I love Apple's products. I bought my first Mac in February of 1984 and still feel that I was excessively cautious in waiting a whole month. I'm writing this on a Mac Mini I bought about six weeks ago.

But I'll guess you weren't paying attention to Apple in, say, 1996, were you?

I went out to the Apple Worldwide Developer's Conference to learn all about the exciting new Copland OS so that we could be sure our software would work on it, brought it to test in the compatibility lab. One of the points I made to my company to get them to cough up the dough was that I would be coming back with a CD of an early developers' release of the OS.

Although it was sort of neat to see third-party Power Computing Mac clones being used at the check-in booths, there was a definite air of depression and desperation hanging over the conference like a cloud. New CEO Gil Amelio got things off to a bad start by coming in to address an audience of developers, dressed in a business suit and wearing a tie. Clueless! People yelled at him to "lose the tie" but he refused to take it off. Inflexible!
Image
In the compatibility lab, our software wouldn't run and neither would anybody else's. In fact the OS itself seemed to barely run. At some point in the conference, they announced that the promised developer CDs were not ready and we would not receive them at the meeting.

Developers were deserting the platform in droves. Apple was very close to dying in 1996.

I'll also bet that you never have written a Schwinn bicycle, am I right? When I was in school, the bike racks at elementary school and high school were dominated by Schwinns (think "Pee-Wee's Big Adventure"), they were definitely THE bike to have. (I pretended to be proud of my "English bike" because it had gears, but in my heart I knew it was inferior). I don't really know how to describe just how dominant they were, and they were pretty good bikes, too, well made and durable. My first five-speed was a Schwinn Varsity. They had a marketing machine and dealer network like you wouldn't believe. One reason I'm bringing up Schwinn is because I read a wonderful quotation from F. W. Schwinn that has stuck in my mind. I think it is very important. The apparent solidity and stability of big corporations is an illusion, and they have an interest in maintaining that illusion, but stuff changes and it changes quickly. Schwinn said:
A young man in business is in danger of thinking that some day, when he has really mastered his job, everything will go smoothly. It is never going to happen. You had better know now that business means trouble. The two words are inseparable. From now on, you won't be out of trouble until you're out of business.
I'm not saying Apple is in any particular "trouble" right now, I'm saying just remember, it's in the nature of business itself--it doesn't matter how good a company is, every company is continuously "in trouble."

Image
Last edited by nisiprius on Thu Mar 21, 2013 7:39 am, edited 2 times in total.
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Re: Apple Stock - Seems great, right?

Post by carolinaman »

In order to maintain their market leadership, Apple needs to continue coming out with new products, not just refinements of current products. Part of the genius of Steve Jobs was finding those new markets and products and developing products to fit it. It remains to be seen how well Apple will do this without Jobs.
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Re: Apple Stock - Seems great, right?

Post by rkhusky »

Chan_va wrote:
Everything you say may be true, but Appl is the most analyzed company on the planet. So, whatever info is out there is factored into the current price. Sure buy Appl, but don't kid yourself that you are buying it for any rational reason.

What I would do with 10k of play money is look for a small company that is undervalued and potentially will grow big. And sell it when it does to others who catch on late. And do it with a few companies like that to hedge my bets.

Wait there is an index fund for that- small cap value :happy
Why is Apple correctly priced, but some small company is undervalued? Either you believe that the market correctly prices stocks or you don't. Really what you are saying is: take a gamble on small companies that you think are undervalued (unless you have some other source of information that the thousands of other investors don't have).
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Chan_va
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Re: Apple Stock - Seems great, right?

Post by Chan_va »

rkhusky wrote:
Chan_va wrote:
Everything you say may be true, but Appl is the most analyzed company on the planet. So, whatever info is out there is factored into the current price. Sure buy Appl, but don't kid yourself that you are buying it for any rational reason.

What I would do with 10k of play money is look for a small company that is undervalued and potentially will grow big. And sell it when it does to others who catch on late. And do it with a few companies like that to hedge my bets.

Wait there is an index fund for that- small cap value :happy
Why is Apple correctly priced, but some small company is undervalued? Either you believe that the market correctly prices stocks or you don't. Really what you are saying is: take a gamble on small companies that you think are undervalued (unless you have some other source of information that the thousands of other investors don't have).
Why is it all or nothing? Its like saying that you don't believe in gravity because of airplanes. All I am saying is that you have better odds identifying an under priced company when it's every move isn't dissected by 1000 analysts.
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Re: Apple Stock - Seems great, right?

Post by rkhusky »

Chan_va wrote:
Why is it all or nothing? Its like saying that you don't believe in gravity because of airplanes. All I am saying is that you have better odds identifying an under priced company when it's every move isn't dissected by 1000 analysts.
I would guess that all the top (5000? more?) stocks are analyzed by 1000's of analysts. Perhaps there is not as much analysis in penny stocks, but those are akin to gambling anyway.
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Re: Apple Stock - Seems great, right?

Post by 325e »

Tech industry is one of the most difficult markets to predict. Apple could continue to go up, but eventually, UNLESS IT CHANGES STRATEGY like IBM, the odds are that it will go down like Dell, HP, Kodak, and every other tech company. Is that next year, 5 years, or 40 years, we have no idea.

http://brontecapital.blogspot.com/2009/ ... rkets.html

"Warren Buffett has a group of his best investing friends get together once a year. He originally called it the Graham group in honour of his mentor Ben Graham who presented at the first annual meeting in 1968. By 1991 the group had expanded somewhat to include not only the original fabulous stock pickers but some business luminaries who could help enlighten the group on the nitty-gritty of their industries. One regular attendee was Bill Gates of Microsoft fame. From here I will quote Alice Schroder:

After a while Buffett asked everyone to pick their favourite stock.
What about Kodak? asked Bill Ruane. He looked back at Gates to see what he would say.
“Kodak is toast,” said Gates.
Nobody else in the Buffett Group knew that the internet and digital technology would make film cameras toast. In 1991, even Kodak didn’t know it was toast."

Point being, sure Apple could go up again. But it could go down just the same and we have no idea of how to predict it. Who would have guessed that Intel would be struggling right now? They have a pretty good business model, but computers are slowing down. That is why it is hard to predict who will be on top of such a rapidly changing market.

Also, tech companies post highest profits just before they are about to go off the cliff. That is because someone else is chasing them up the value line. They need to come up with something completely new to start that back up again. But all they have is ipads with different sized screens and cheaper iphones. Maybe they will hit it big with tv or something, but we have no idea.

If you like individual stocks, than at least find something that owns a more stable industry. Then you just have to worry about management and less about guessing where technology will go.
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Re: Apple Stock - Seems great, right?

Post by Scott S »

Apple already makes up about 1.25% of my portfolio -- I'm fine with that much.
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Re: Apple Stock - Seems great, right?

Post by zaboomafoozarg »

Never understood the appeal of IPhones vs Android. In features, IPhones don't come close. I've used my Droid as a full fledged 3D GPS with voice for almost 3 years. I saw somebody's IPhone 4S the other day and they still didn't have the ability to do that, and Apple wouldn't allow you to install new software that would support it... nope, that was only added on the IPhone 5 this past fall, and you have to buy one of those. :shock:

And people pay extra for these things? :D
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Re: Apple Stock - Seems great, right?

Post by letsgobobby »

I can't imagine there is a more efficient markeplace than for AAPL stock. It must be the most analyzed, talked about, studied, parsed, ruminated upon stock in the entire world. If it is not an example of efficient pricing than I don't know what is!
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Re: Apple Stock - Seems great, right?

Post by swaption »

nisiprius wrote:
Shabber wrote:Apple seems amazing to me. 2.34% Dividend, P/E Ratio of 10, Innovative company with products that work well, took a 22% hit in the last 12 months so you are buying low.
I love Apple's products. I bought my first Mac in February of 1984 and still feel that I was excessively cautious in waiting a whole month. I'm writing this on a Mac Mini I bought about six weeks ago.

But I'll guess you weren't paying attention to Apple in, say, 1996, were you?

I went out to the Apple Worldwide Developer's Conference to learn all about the exciting new Copland OS so that we could be sure our software would work on it, brought it to test in the compatibility lab. One of the points I made to my company to get them to cough up the dough was that I would be coming back with a CD of an early developers' release of the OS.

Although it was sort of neat to see third-party Power Computing Mac clones being used at the check-in booths, there was a definite air of depression and desperation hanging over the conference like a cloud. New CEO Gil Amelio got things off to a bad start by coming in to address an audience of developers, dressed in a business suit and wearing a tie. Clueless! People yelled at him to "lose the tie" but he refused to take it off. Inflexible!
Image
In the compatibility lab, our software wouldn't run and neither would anybody else's. In fact the OS itself seemed to barely run. At some point in the conference, they announced that the promised developer CDs were not ready and we would not receive them at the meeting.

Developers were deserting the platform in droves. Apple was very close to dying in 1996.

I'll also bet that you never have written a Schwinn bicycle, am I right? When I was in school, the bike racks at elementary school and high school were dominated by Schwinns (think "Pee-Wee's Big Adventure"), they were definitely THE bike to have. (I pretended to be proud of my "English bike" because it had gears, but in my heart I knew it was inferior). I don't really know how to describe just how dominant they were, and they were pretty good bikes, too, well made and durable. My first five-speed was a Schwinn Varsity. They had a marketing machine and dealer network like you wouldn't believe. One reason I'm bringing up Schwinn is because I read a wonderful quotation from F. W. Schwinn that has stuck in my mind. I think it is very important. The apparent solidity and stability of big corporations is an illusion, and they have an interest in maintaining that illusion, but stuff changes and it changes quickly. Schwinn said:
A young man in business is in danger of thinking that some day, when he has really mastered his job, everything will go smoothly. It is never going to happen. You had better know now that business means trouble. The two words are inseparable. From now on, you won't be out of trouble until you're out of business.
I'm not saying Apple is in any particular "trouble" right now, I'm saying just remember, it's in the nature of business itself--it doesn't matter how good a company is, every company is continuously "in trouble."

Image
Nis, your reference to Schwinn could be equally applicable to A&P. Most people have no idea that A&P was basically Walmart before Walmart. For over 40 years A&P was the nation's leading retailer, at times more than double any other in terms of sales, including companies like Sears. So what happened? Basically, within a relative short time span, the two brothers that ran the company passed away. They complemented eachother very well, and consistently made the right decisions in extremely complex and diverse business conditions, with significantly evolving technology and regulatory parameters (think refrigeration, the automobile, packaging, and the FDR administration).

I think people easily forget how important Steve Jobs was to Apple. Apple's is a heroic accomplishment to be able to squeeze out the kind of margins we currently see from products that are near commodities for most others. Certainly possible Cook and ohers can keep it going, but certainly not a forgone conclusion. There is no shortage of cautionary tales. This company is not to be confused with IBM or GE where the determinants of success have been largely institutionalized. Even then, Watson's legacy at IBM did not preclude the need for Gerstner. Time will tell.
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Re: Apple Stock - Seems great, right?

Post by Shabber »

I appreciate all the insight above. I think I am going to take some advice and divide up my 10k stock gambling money vs dumping all into one stock. Perhaps pick 3. Hey, I'm diversifying and before you know it I will just buy more TSM and forget the idea completely :-)
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Shabber
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Re: Apple Stock - Seems great, right?

Post by Shabber »

Well, I did end up getting into AAPL Jan 2013 at the $513 a share that seemed like such a deal. It is now up to $594 and while everything is saying get out and grab the profit, I can't help but keep looking at this stock and saying 3.29% dividend, PE of 14, and still the standard in tablets/phones.....there must be more room for it to grow. I'd be interested to hear other thoughts (other than get the proper AA and stick to the plan). Even Microsoft is at a PE of 15.
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Re: Apple Stock - Seems great, right?

Post by nisiprius »

Shabber wrote:Well, I did end up getting into AAPL Jan 2013 at the $513 a share that seemed like such a deal. It is now up to $594 and while everything is saying get out and grab the profit, I can't help but keep looking at this stock and saying 3.29% dividend, PE of 14, and still the standard in tablets/phones.....there must be more room for it to grow. I'd be interested to hear other thoughts (other than get the proper AA and stick to the plan). Even Microsoft is at a PE of 15.
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Re: Apple Stock - Seems great, right?

Post by dimdum »

As long as its part of your play money, its fine to hold individual stocks. Just keep an eye on it and sell if it goes too low (500) or too high (700).
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Re: Apple Stock - Seems great, right?

Post by dumbbunny »

Never gamble more than you can afford to lose.
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Re: Apple Stock - Seems great, right?

Post by pennstater2005 »

Who's to say it won't go back to $700? Or maybe the other way down to $400. Exactly the reason I got out of individual stocks. I couldn't take it.
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Re: Apple Stock - Seems great, right?

Post by abuss368 »

Too much risks with individual stocks that an investor is typically not compensated for.

I would rather have the $10,000 "play" money invested in index funds.
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Re: Apple Stock - Seems great, right?

Post by WarpSpeed »

I haven't read this whole thread, but I did read the start and the most recent posts. While the OP seems to be fairly happy with the return in AAPL over the last 17 months or so, I can't help but point out that those returns are not so great when compared to the return of the S&P 500....

The OP has seen perhaps a 16% gain in capital appreciation. Add in dividends, and total return might go up to around 18-19%. Now, look the return for the S&P500 over the same timeframe. It's up nearly 27%. The S&P has an average dividend yield of around 1.8% (lower than AAPL). But looking at total return the S&P index returned about 10% more over the same time period than AAPL individual stock, with *significantly* less risk due to the diversification it provides. Nearly the same numbers hold true if one looks at Vanguard Total Market (VTI) over the same time period, but here there is even *more* diversification.

Now, I'm not saying it's not fun/interesting to try one's hand at stock picking. I've done it. Sometimes I do a really great job (NFLX). Sometimes I pick some real dogs (ZAGG). In the end, however, it's a very risky game and for most people the results will probably underperform low-cost index funds. There is research that shows this. That's what the Bogleheads forums are all about.

Will AAPL continue to underperform the broader market? I don't know. It's a good company with a great business. Chances are over time it will fall inline with market performance given enough time. The thing is, over any short timeframe (which you can define anyway you want) there will always be individual stocks (or sectors, or industries, etc.) that will underperform our outperform. The problem is it's nearly impossible to predict what they'll be. You might get the picks right, but the timing wrong. Or the timing right, but the picks wrong. Maybe you'll get both right for one pick, but you'll miss on another. No matter what happens, you're definitely taking on more risk and more expense when you actively manage a portfolio of individual stocks.

Whatever you decide, good luck.
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Re: Apple Stock - Seems great, right?

Post by ab80 »

I got in around $420. Just waiting for my capital gains to become long term next month to sell and move to index funds. Not really interested in buying individual stocks anymore. Hopefully the stock split pushes up the price a little more.
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Re: Apple Stock - Seems great, right?

Post by Atgard »

AAPL actually helped break me of the individual stock habit, and got me into indexing (so please forgive a little personal story)…

I was a huge Mac fan back when nobody would touch the things (in the 1990s). I saw how Macs only accounted for 4-5% of the market, but people were so frustrated by their Windows computers. Then I saw how people loved the iPod, and how Apple was coming out with new products like the iMac that would appeal to the same people. I mean, if people paid $400 for a music player they loved, why not pay $800 and get a computer from the same company? And from 4% of the market, it wouldn't take much to double or triple that.

So I bought 100 shares for $43 back in 1999.* I then watched it go up generally a few dollars a day, and I thought I was so brilliant for earning hundreds of dollars a day for doing nothing.

Then the tech bubble hit, and it literally lost 2/3rds of its value in overnight trading.** To my credit, I did NOT sell at the bottom, and figured I'd wait for it to come back up. I did learn that a sinking tide lowers all ships, as Apple was tarnished with the "tech" brush, even though it actually made products and sold them for a profit, but got dragged down by all the Pets.com type Internet hype businesses.

So I held it for 4 years, while it stagnated, paying 0 dividend. They came out with Mac Minis that cost about the same as the darn iPods, and still people didn't buy them! I eventually sold in 2003 for about what I bought it for. I figured even bank CDs were paying 6% with no risk, while I was taking lots of risk (I saw it drop 67% overnight) for zero return. Heck, I may as well buy a safe blue-chip stock like GM that pays a 6% dividend!***

Check out a chart and see what AAPL did almost from the day after I sold. I shudder to think that my $4,300 investment was worth $280,000 at the peak.

However, I learned some very important lessons, and basically for free, since I about broke even in the whole deal. I picked the right company, at the right time, but STILL didn't make any money because I didn't also SELL at the right time. And that's because I bought it for the wrong reason -- as much as I knew about Apple, I had no clue about the iPhone, which would drive their growth. Mac sales are still about 6%, and are a rounding error to Apple.

I also sleep at night because I figure it's almost impossible to really make that kind of money. Any investor would have either (a) sold when the stock doubled or tripled or quadrupled, or (b) held it to the top and then all the way back down. To really make money, you need to greedily hold hold hold as it goes up 60x, then somehow magically, after all that positive reinforcement, suddenly become conservative and decide to sell at just the right peak. It is literally almost impossible, because the "rational" investor will sell too early, and the "greedy" investor will hold too long.

So… thank you, AAPL, for putting me on the path to Bogledom...


* It has split twice since then, so 400 shares now.
** This was my first clue that this game was rigged by people more powerful than me; I could only trade 9AM-4PM.
*** A whole other lesson... the short version: fortunately, I got out and about broke even, before "safe" GM went to $0.
magneto
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Re: Apple Stock - Seems great, right?

Post by magneto »

pennstater2005 wrote:Who's to say it won't go back to $700? Or maybe the other way down to $400. Exactly the reason I got out of individual stocks. I couldn't take it.
+1

Who said something like 'never make predictions especially about the future'?
'There is a tide in the affairs of men ...', Brutus (Market Timer)
lowerleisureclass
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Re: Apple Stock - Seems great, right?

Post by lowerleisureclass »

AAPL pretty much represents my biggest financial dilemma these days, not counting aging parents.

Last year I fired the advisor I've been with since I first had enough $$ to invest and have been educating myself, simplifying, and moving into index funds ever since -- but I still have about 27% of my net worth in individual stocks. And the ones I have left are of course the ones that have done the best. I got AAPL back 2007 at $121, rode it up, down, up, down, up -- at this point I'm up almost 500% and it's about 1 years' worth of living expenses. It's hard not to want to hang onto something that has done so well, but I do not delude myself that it was anything but dumb luck that I bought it at the time I did. I've never imagined that I knew a thing about the market, I just know how to save and live cheaply. Even reading Larry Swedroe's bond book didn't do much to dent my ignorance, half of it might as well have been in Hungarian as far as I was concerned. So I'm trying to convince myself to sell all those individual stocks, but AAPL will probably be one of last to go.

Any insight on whether it's a sin to continue to own individual stocks (at least for while; I'm certainly not cashing out the stuff in taxable at this point) while putting new money into index funds?
"At either end of the economic spectrum there lies a leisure class." -- Eric Beck, rock climber
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Shabber
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Re: Apple Stock - Seems great, right?

Post by Shabber »

WarpSpeed wrote:But looking at total return the S&P index returned about 10% more over the same time period than AAPL individual stock, with *significantly* less risk due to the diversification it provides.
WOW! You are totally right. I think that is the exact thing I needed to kick this individual stock habit. Thanks! Also, Atgard, that was a great story.
UnclePennybags
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Re: Apple Stock - Seems great, right?

Post by UnclePennybags »

AAPL and AMZN are the reason I used to think I was an investing genius. I bought them both when I first fell in love with investing in the 90s and sold most of AAPL in 2010 and all of AMZN in 2011, thinking that they had gotten as big as they could reasonably expect to get (apparently I was wrong). When I bought them, I didn't understand anything about fundamental analysis or really much of anything at all. The entirety of my analysis was "I love buying things from these companies, therefore other people should love that too." I made a lot of stupid selections too, but those two did so well that they obliterated my losses in other issues and made me look like the next Warren Buffet in my mind (minus the actual significant initial investment side of things). If I take those two "flukes" out of my results, I turn out to be a relatively poor stock picker.

I think the pending iWatch will demolish the segment and kill off Fitbit and Nike FuelBand and will grow that sector exponentially. However, I'm not convinced there is another potential homerun like the iPad. However, at roughly the same P/E as MSFT, I think AAPL's potential for growth is far, far higher. So, I don't think it is a bad stock to own, but it is impossible for me to imagine it growing by a factor of 10, so I've lost interest in it.

What convinced me ultimately that I'd be better off with an index-based strategy was when I was trying to do some kind of meaningful analysis of AMZN's stock price. I still love the company and still think that they are poised to dominate the sale of virtually everything in the world, but I have no idea when they will ever reflect that potential in their profits and almost no idea how to justify P/E ratios like theirs. When I came to grips with my inability to logically analyze the problem, I just sold it and moved on. Since that brilliant decision, AMZN went on to double again (although it has since given up a lot of that).

I still enjoy stock picking and invest in some equities in what my wife calls the "Gambling Fund." It is a very small portion of my overall portfolio in a seperate account and aside from AAPL shares that I have held onto mostly for bragging rights, I avoid investing in any large market cap issues, preferring to try to find some new company that does something extraordinary which will give me another mega-boost.
Atgard
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Re: Apple Stock - Seems great, right?

Post by Atgard »

lowerleisureclass wrote:AAPL pretty much represents my biggest financial dilemma these days, not counting aging parents.

Last year I fired the advisor I've been with since I first had enough $$ to invest and have been educating myself, simplifying, and moving into index funds ever since -- but I still have about 27% of my net worth in individual stocks. And the ones I have left are of course the ones that have done the best. I got AAPL back 2007 at $121, rode it up, down, up, down, up -- at this point I'm up almost 500% and it's about 1 years' worth of living expenses. It's hard not to want to hang onto something that has done so well, but I do not delude myself that it was anything but dumb luck that I bought it at the time I did. I've never imagined that I knew a thing about the market, I just know how to save and live cheaply. Even reading Larry Swedroe's bond book didn't do much to dent my ignorance, half of it might as well have been in Hungarian as far as I was concerned. So I'm trying to convince myself to sell all those individual stocks, but AAPL will probably be one of last to go.

Any insight on whether it's a sin to continue to own individual stocks (at least for while; I'm certainly not cashing out the stuff in taxable at this point) while putting new money into index funds?
My free advice that is worth what you paid for it: sell, my friend, and consider yourself lucky. (At least sell half.) You won. The odds that it will continue to outperform the entire market like that once it's on top are slim, IMHO. Otherwise, we'll see you back here with a similar story to mine: "I bought AAPL at $121… then it was worth $700… but I held it… and then I finally sold for $121." :oops: :mrgreen:

Disclaimer: don't blame me if Apple goes up 60x again! (Although the thought of AAPL trading at 36,000 and being worth more than the whole rest of the S&P 500 is a bit hard to believe.)
ab80
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Re: Apple Stock - Seems great, right?

Post by ab80 »

Well there's a 7:1 stock split coming in June, and if they got 60x higher, I'm sure they'd split again.
Atgard
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Re: Apple Stock - Seems great, right?

Post by Atgard »

ab80 wrote:Well there's a 7:1 stock split coming in June, and if they got 60x higher, I'm sure they'd split again.
Of course. But 1 share at 42,000 or 7 shares at 6,000 or 70 shares at 600 is all the same thing, with the same market capitalization. I doubt Apple's market cap will be 60x what it is today, no matter how many times the stock splits…

But I've been wrong on AAPL before… hence why I now only own it through VTI.
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Re: Apple Stock - Seems great, right?

Post by 3CT_Paddler »

zaboomafoozarg wrote:Never understood the appeal of IPhones vs Android. In features, IPhones don't come close. I've used my Droid as a full fledged 3D GPS with voice for almost 3 years. I saw somebody's IPhone 4S the other day and they still didn't have the ability to do that, and Apple wouldn't allow you to install new software that would support it... nope, that was only added on the IPhone 5 this past fall, and you have to buy one of those. :shock:

And people pay extra for these things? :D
My coworker has the new Samsung and for the last couple weeks he has constantly had issues with it. Some of the freedom with Android has also led to fragmentation/bugs in the OS )(http://blog.cascadesoft.net/2013/12/31/ ... on-per-se/). Non technical people usually care more about an interface that is intuitive and (nearly) bug free.
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Re: Apple Stock - Seems great, right?

Post by linenfort »

Shabber, I have some leftover AAPL. I first started buying at $75 I think, but the bulk of what I have left was bought in the 3- and 400s. (Took profits when Mr Jobs passed away, then got back in later).

I have no idea where the stock is going, and I wish I just had everying in the S&P500 + bonds. I'm like a fat person saying he wished he was thin while eating one more chocolate doughnut. Can't sell the last of my Apple shares just yet.

Good luck, and I hope you sell "too soon."
lowerleisureclass
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Re: Apple Stock - Seems great, right?

Post by lowerleisureclass »

Atgard wrote:
lowerleisureclass wrote:AAPL pretty much represents my biggest financial dilemma these days, not counting aging parents.

Last year I fired the advisor I've been with since I first had enough $$ to invest and have been educating myself, simplifying, and moving into index funds ever since -- but I still have about 27% of my net worth in individual stocks. And the ones I have left are of course the ones that have done the best. I got AAPL back 2007 at $121, rode it up, down, up, down, up -- at this point I'm up almost 500% and it's about 1 years' worth of living expenses. It's hard not to want to hang onto something that has done so well, but I do not delude myself that it was anything but dumb luck that I bought it at the time I did. I've never imagined that I knew a thing about the market, I just know how to save and live cheaply. Even reading Larry Swedroe's bond book didn't do much to dent my ignorance, half of it might as well have been in Hungarian as far as I was concerned. So I'm trying to convince myself to sell all those individual stocks, but AAPL will probably be one of last to go.

Any insight on whether it's a sin to continue to own individual stocks (at least for while; I'm certainly not cashing out the stuff in taxable at this point) while putting new money into index funds?
My free advice that is worth what you paid for it: sell, my friend, and consider yourself lucky. (At least sell half.) You won. The odds that it will continue to outperform the entire market like that once it's on top are slim, IMHO. Otherwise, we'll see you back here with a similar story to mine: "I bought AAPL at $121… then it was worth $700… but I held it… and then I finally sold for $121." :oops: :mrgreen:

Disclaimer: don't blame me if Apple goes up 60x again! (Although the thought of AAPL trading at 36,000 and being worth more than the whole rest of the S&P 500 is a bit hard to believe.)
Thank you for your response, Atgard. I'm trying to strike a balance between "don't just do something, stand there" and moving toward a more reasonable AA by doing things slowly but steadily. If I have cash I'm happy to lump sum in, but selling positions feels different, whether it actually is or not. Selling everything all at once is a mental hurdle I can't get over, so I'm doing a little each month in my Roth and putting off taxable until I can offset a loss. Thanks for the encouragement, and for the reminder that selling half is also an option -- for some reason I tend to forget that.
"At either end of the economic spectrum there lies a leisure class." -- Eric Beck, rock climber
ajcp
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Re: Apple Stock - Seems great, right?

Post by ajcp »

3CT_Paddler wrote:
zaboomafoozarg wrote:Never understood the appeal of IPhones vs Android. In features, IPhones don't come close. I've used my Droid as a full fledged 3D GPS with voice for almost 3 years. I saw somebody's IPhone 4S the other day and they still didn't have the ability to do that, and Apple wouldn't allow you to install new software that would support it... nope, that was only added on the IPhone 5 this past fall, and you have to buy one of those. :shock:

And people pay extra for these things? :D
My coworker has the new Samsung and for the last couple weeks he has constantly had issues with it. Some of the freedom with Android has also led to fragmentation/bugs in the OS )(http://blog.cascadesoft.net/2013/12/31/ ... on-per-se/). Non technical people usually care more about an interface that is intuitive and (nearly) bug free.
That's written from a developer's point of view, and that there's are a bunch of reasons it's more of a pain to make an app that works on hundreds of different android devices than half a dozen ios devices. Which, sure, that makes sense, even if it stinks and could be improved. But that doesn't mean ios is bug free or even less buggy. In fact, a recent study determined that one of these OSs had over double the crash rate of the other one. Care to guess which is which :wink: ?
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