“Just thinking about Terry and Jeanne Gregory’s portfolio can be a little scary. Retirees now living in Honolulu, the Gregorys have basically their entire life savings — about $2.5 million — invested in just one stock: Apple Inc.,” Jon Birger reports for Fortune. “The Gregorys’ love affair with Apple (AAPL) flouts every bit of investment advice doled out by magazines like this one and by mainstream investment strategists. No investor — especially a retiree whose portfolio should be geared toward income and wealth preservation, not growth and risk taking — should have all his money invested in just one stock. Right?”
Birger reports, “Well, before you dismiss the Gregorys as fools, ask yourself these questions. Do you live in a $650,000 luxury condo a stone’s throw from Waikiki Beach? And did you have the smarts, conviction, and stick-to-itiveness to turn a $200,000 investment in 2004 — in a seemingly past-its-prime computer stock with a mere 3% market share — into a nearly $3 million windfall that financed a dream early retirement? ‘All the advice was to diversify, but in our experience, diversification didn’t really work,’ says Jeanne Gregory, 62, who, like her husband, Terry, 58, is retired from the advertising industry. ‘Diversification,” adds Terry, “may be good for preserving your wealth, but we needed our wealth to grow.'”
“The recent selloff is definitely a turning point for the stock. The question is, Turning to where? Skeptics see it as the beginning of the end of Apple’s amazing run: “The pie is almost baked,” declares Nomura analyst Stuart Jeffrey. For the true believers, however, it’s an early Christmas present — the ultimate door-buster for Wall Street bargain hunters. Apple’s price/earnings ratio of 13 is near a 10-year low, and Apple now has a lower valuation than large-cap peers with far inferior earnings growth such as Wal-Mart (14 P/E) (WMT), Coca-Cola (20) (KO), Pfizer (19) (PFE), and Qualcomm (18) (QCOM),” Birger reports. “The stock is so cheap that Mark Mulholland, portfolio manager of the Matthew 25 fund (MXXVX), has been adding to his Apple position even though he already had an 18% position in the stock before the decline. ‘It’s unbelievable,’ Mulholland said when the stock dipped below $550. ‘I am so psyched to be able to get shares of Apple at this level.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Tayster” for the heads up.]
Apple stock’s #1 enemy is the hedge funds and some institutional gamblers. They, in their greed and mindless one minded cutthroat antics, will kill the goose that lays the golden egg much like policitians that will fall on their swords for a selfish cause no matter what the casualties…
Apple needs to rid themselves of this cancer before it exhausts the real investors. Though a stock split is not real extra value, a percieved cheap Apple stock as a result of a good 4-10:1 split will bring in the masses and pry away massive quantities from the institutionals and therefore dilute their influence and dirt manipulative powers and antics.
I am a senior. as of today, Friday December 7, I am still up 27%.
Apple stocks are half of my portfolio.
Should I sell, or should I hang on.
I am a bit nervous at this point.
I know that the stock market is controlled by hedge funds…greedy pigs….and for people like me, they can do an awful lot of damage.
Common sense would tell you to hang on, but the stock market lately as far as Apple is concerned makes absolutely no sense at all. All this stuff about how fundamentals don’t matter any more sort of wrecks the foundation of the stock market. But maybe no one cares anymore as long as they’ve found a way to make the market dance to their own beat. In a million years, I can’t possibly see how Amazon is worth more than Apple. It’s like saying a quarter is worth more than a dollar and no one would take a quarter in place of a dollar and be happy with it (I wouldn’t think they would) unless they just like shiny metal. But we’re talking about real value. If Apple holds $121 billion and Amazon only has about $5 billion in cash, that’s real money we’re talking about and not future money. No way a sane person is going to say Amazon is worth more than Apple, no way at all. Yet investors say Amazon IS worth more than Apple. It really makes no sense.
So I’ll continue to hang onto Apple stock out of stubborness but I wouldn’t advise anyone else because this market is just topsy-turvy and downright flaky, so yes it would seem Apple could be worth less than Amazon by some standard I don’t quite see. The hedge funds would seem to be very dangerous to the economy, but I guess nobody really cares what happens to the economy.
If you’re not a trader, but an investor, the only thing to do is buy and hold. Time is your friend. Don’t let yourself get scared, because that’s when you sell in a panic, and miss when the pigs release the pressure and the price goes back to its true level. The only way to outwit them is to outlast them.
always good advice from Mr. Ken
I think there must be a lot of people in a similar position as yourself and many of them have decided to get out and that’s part of the reason for the recent slide. But who can really say? I’m in it for the long haul. I want to see Apple selling for $8-900/share. I think it will happen within a year or two. I think too much of the team we have at Apple (and too little of the competition) to play it otherwise.
I hoped to retire and put it off for another half year or so. I can do this, as you have, because of my very long term investing mainly in AAPL. Yes, I am down 22.5% from this years peek. But, I am up 31.5% for the year. I started owning AAPL at the end of the 2000 bubble. Almost always owned some AAPL. As of today, my average share value is $198.75 with a 168.3% return. So, yes, loosing 22.5% hurts but I will swallow up that loss in less than a half year as long as I own AAPL. Most targets for 12 months from now are between $650 and $850 with an average of $755. That is a 42% gain. So, I will be in and hope you will be too.
Have a good retirement!
I was stopped out of my position in AAPL on 1 October, with no intention of taking a position in AAPL anytime soon. For the time being, it’s back to the 4x, short a few put options (LEAPS actually) on the diamond, the spyder, and the Q’s.
Oh yeah? Come over here and say that.
What while you’re at it, bring me some RAW deconvolution with a level-10 JPEG compression and 27x zoom.
I’m not preventing you or anyone else from holding or buying into AAPL. If you think it’s going up, by all means, have at it. I’m a trader, not an investor. I don’t ride the tide. Nor do I have the time or desire to.
Shorting put options, even index ones, before January? That takes moxie. FWIW I’ve been burned badly in the past shorting LEAP puts, because even though in the end I was right about the strike price, the puts were called fully 1 year in advance after the market fell, to my huge disadvantage. I couldn’t figure out why they were exercised, but suspect my greedy brokerage had some clever, inside arbitrage scheme.
taosbob. At first I wasn’t sure what you were referring to, but I see now. It was my poor choice of words.
When I said, short a few put options, I didn’t mean I shorted the put. I meant all of my trading is 4x now with the exception of a few put options I hold on the DIA, SPY, and Q’s.
My apologies. I certainly understand your surprise and your response.