Monday, February 13, 2017

Apple Stock Tops its Record High

Apple closed at $133, and I've sold half my shares (I'll sell the rest at $140 or so). It's my fifth consecutive killing in the stock.

Every year or two, some analyst gets spooked, the rest glom on, and Apple's stock price plunges 30% or so. At that point, I buy (appearing crazy because the price is going down!, and even intelligent people can't grasp "buy low, sell high"). I hold on for as long as it takes, and when it rises back up, I sell. Rinse and repeat. Over and over again.

Watch! In a year or so, there'll be some new trumped-up issue - bad reception, or bending or cracking or whatever. The stock will, irrationally, plummet, remaining low even after Apple's fixed the issue. I'll buy again, hold patiently again, then ride it back up again.

The risk is that it won't recover next time - that the most successful company in the history of the world, sitting on a cash pile of $250 billion, will shrivel up and die because of some fleeting issue.

I just don't see that as a real risk. That cash horde alone - which doesn't even do anything! - dwarfs the total market value of all but seven other corporations. Apple could throw their entire mega-successful business in the garbage and buy Starbucks, Boeing, and Goldman Sachs. If customers update their iPads more slowly than expected, or a phone antenna doesn't work properly, or a new product line undersells expectations, that's just not going to cause a death spiral. I'm not saying they'll be dominant forever (if I thought so, I'd be buying, rather than selling, at $130). But the downside of buying at Apple's inevitable 30% bullish downturns strikes me as minimal.


Dave said...

How do you decide when to sell?

James Leff said...

Half when it returns to its old high, then more when it seems to plateau. It helps that I'm not greedy.

trampdad said...

So are you now 100% out?

Jim Leff said...

I sold at $130 and again at $140. I'm stilll holding some shares that are short term, so the tax issue gives me an excuse to hold out greedily.

The fact that yesterday's announcement was not accompanied by the usual before/after volatility reflects continued confidence - I.e., people aren't getting spazzy yet. It's usually evident when people reach that point. You can feel the skittishness (lots of,gloomy press stemming from analysts with games to play). Then the sky falls again, self-fufilling the drummed-up anxiety.

Jim Leff said...

To answer your real question, I'd absolutely sell here. The reason "buy low/sell high" confounds many people is they confuse it with "buy bottom/sell top", and that's an impossibility for us mere mortals. You've got to be willing to leave money on the table… but that's supremely difficult for many people.

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