Monday, March 23, 2020

Apple's Down 34%

Just last month, I wrote:
One day, historians will recall that $146 opportunity as a unique aberration: a chance to buy a blue chip stock (with $200 billion-with-a-"b" cash reserves) at an insane 100% discount. If this were jellybeans, people would have been shooting each other in the streets for a chance to buy.
Well, it's now down to $215, so it may happen again. And my previous writing about why Apple's dips are a fantastic opportunity for patient investors still applies. I bought some shares at $250, and I'll buy more now (sidelining a few bucks to buy more if it drops still more).

I've also contributed to two local food banks and Meals on Wheels, am buying tons and tons of takeout from local independent restaurants (and tipping servers 50%+) and keeping enough cash on hand to offer vulnerable friends interest-free loans if necessary. Anyone who can afford to ride out this storm - and certainly anyone grubbing around for stock bargains - ought to do likewise.

Of course, this dip is not based on the usual irrational fear and manipulation. There are actual macroeconomic problems. So the recovery may not occur within a year this time. I might need to wait 2 or 3 or 4 years. But at a 34% discount from its recent high, I'd be happy to spread that gain over a few years.

And if Apple never fully recovers, which is unlikely, then my investment will remain stagnant or perhaps sink a bit more. Not a catastrophe. But it's hard to imagine that this blue chip company with $200B cash in the bank will go out of business, leaving me high and dry. Never say never, but an overwhelmingly high probability of 34% with a very small change of eternal stagnation and a microscopic chance of disaster sounds awfully good to me.


Anonymous said...

A year and a half ago, when we were about to go to war with North Korea, I sold everything in my investment account and went to cash. I kept a record of what I was invested in back then, and checked the values today. If I’d stayed in the market (with the same stocks) I’d be down 22% from that point and 8% from my original investment 4 years ago. I did make almost 20% by the time I got out and obviously missed the runup after that, but I feel like where I am is lucky and where I’d have been is actually better than the Dow. Hats off to my advisor.

Jim Leff said...

“Damned statistics”. Depends on when you check. You can prove any point by choosing another end date.

Three weeks ago would have been a different story. Two years hence, same. The trick is patience.

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