Wednesday, July 27, 2011

Selling Apple

I just sold all my Apple stock, which I'd bought at $115, for $400.

This does not mean I believe their success won't continue. It's just that enormous future success is already built into the price, so there's nowhere to go.

Apple has been swinging between $325 and $375 for quite some time. As I've written previously, one characteristic of a hyper-optimistic stock price is that investors are skittish, and prone to sell on the slightest whiff of bad news. In Apple's case, the price always quickly recovers because 1. the bad news has all been slight, and 2. hyper-optimism is valid.

At some point, though, there will be bad news that's more than slight, and some panic selling. And that's when I'll buy back in again.


Dave said...

Other than the share price, I don't understand under what rubric Apple is more expensive than it was last year or five years ago. Its relative PE is lower now than it has been at any time since 1998. It's PE ratio is well below its growth rate, a trait more characteristic of a value stock than a growth stock.

Jim Leff said...

Dave - see here:

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