Am I stupid (about AAPL)?

By Tom Koger

The other day I was watching one of the stock market shows where Apple stock (AAPL) was discussed. One analyst was asked if he had a position in Apple to which he replied “No”. He was then asked “Why?” He replied with a question “I was stupid?”

There are other indications that show he is not the only one. Late last year, in one of the better known financial TV shows, one of the analysts said he was getting out of AAPL at around $365/share. Yesterday it closed above $585/share. A few weeks ago, that same analyst proclaimed he was shorting AAPL. A few days later he defended position saying that he had been prudent and had limited his losses. Now I don’t have to look any further than the mirror to see another stupid person. About two years ago I decided to add to my long Apple position by making short trades in my IRA. The good news is that I have about $50,000 in profits over the two years. The bad news is that if I had just bought and held on, in that same period, I would have had $150,000 instead.

I have been an AAPL investor since 2007. My position in Apple, like many who have been long term investors, because of its growth, has become a very significant portion of my holdings. Because of this I spend at least a couple of hours a day reading about the company. And it seems to me that recently the attitude and mood regarding Apple stock has improved significantly. So what has changed? Why are we all feeling so stupid about what we should have done regarding Apple stock? Now, there is no question that the the mood of the general market has improved, but not to the degree that Apple has experienced. I submit that the biggest issue, as usual, that was weighing down the stock price was “uncertainty.”

There are other contributors to the uncertainty, but the biggest contributor was Steve Job’s health. Prior to the passing of Steve Jobs, his health was discussed ad infinitum making the stock very volatile. Probably every investor or potential investor knew that Steve Jobs was very sick. A large percentage thought that when he died the company would fold. Others, who did not believe the company would fold, did think that the stock would plunge at first and then after several quarters it would likely rebound. We forget what a weight that this situation had on Apple stock. And it is hard to imagine that the stock has risen over 45% since Steve Jobs passed away on October 5th, 2011. I think now, without this uncertainty, the analysts are focusing on the fundamentals of the company and are now wondering why we were all so stupid.

Since the analysts are now studying Apples markets, profits, P/E ratios, etc., they are coming up with glowing reports. Now, some analyst are saying that it is conceivable AAPL market cap could go to $1 trillion. It’s like they have just discovered a company that was already there.

Tom Koger is a MacDailyNews reader who submitted this article via our contact page this morning.

Related article:
Has Steve Jobs become too much of a liability for Apple shareholders? – December 17, 2008

45 Comments

  1. It’s true that the market dislikes uncertainty, but I don’t think that has had a great effect upon the current price of Apple. The shares are still undervalued by a lot.

  2. I am a lone voice in my household rallying for more APPL. They just don’t get it. So I sit back and laugh at what could be, and every 4-6 weeks, I get to say I told you so, over and over. Kinda depressing. 150 mil in investments and I won’t be heard.

    1. If you have 150 mil to invest you don’t need stocks.Just spread it around high yield corporates and municipals and just kick back and rake it in. If you can get by on 8 – 9 million a year that is.

  3. If I’d spent the same amount of money on Apple, I spent on houses, since 1998, I’d be worth close to 10 million now and not reading this crap, but sipping my morning strawberry smoothie, handed to me by one of my gorgeous assistants, and… No. This kind of thinking is a precursor to suicide and they will blame Apple for it.

  4. If you are referring to the traders on CNBC’s Fast Money, you have to remember they are usually talking about short term trades. In 2008 I sold everything in my retirement account and bought Apple. I watch these shows for ideas but I have learned to be very careful because some of these jokers hate Apple. For example, Steve Cortes is always shorting it and if the stock is rising then he says the law of large numbers will stop it.

    What these guys don’t get is, the world is a large place with many people; CHINA remains virtually untapped. Give it another 3 years until you start talking about slowing growth and the law of large numbers.

    I’m thrilled with the stock and know it is too dangerous to short a stock like APPL!

    1. Similar story, but pre-split $20. Missed triggering the buy by $0.25.

      Yeah I could have and should have bought in anytime in the freaking DECADE since then, but every time AAPL was about break some glass ceiling some external event would drive the entire market back down, and punish AAPL more for some reason. That ended around 2005. Will probably buy in soon, but really, being able to afford a mere 10 shares it’s almost not worth it.

      1. To be fair, before THAT missed trade I’d already made almost $2000 on AAPL when I had it earlier, but was advised to sell and “get back in later”.

        Now, if I get only 10 shares AAPL would have to go up $200 to get me the same amount. Sigh…

        1. AAPL is $586 right now x 10 shares = $5860.00
          You will have $5860.00 worth of AAPL stock. Does that sound better? When the stock doubles, you will have $11,720.00 worth of AAPL stock. If the stock splits 2 for 1, you will have $5860.00 worth of AAPL stock. If your (now 20) shares double, you will have $11,720.00 worth of AAPL stock. Get over the amount of shares and how much they cost. It means absolutely nothing. Buy if you think it’s a good investment (it is), don’t buy if you think it isn’t.

    2. Hi,

      Listening to others is always good, but the ultimate decision is yours. You will live with the gains and losses, always based on your knowledge and comfort level.

      How much I listen most often depends on how much these so called experts (brokers & analysts) are willing to take the same risks I would consider taking listening to their advice, hence most of the time it’s just BS / hot air. I just read and listen left and right, ultimately making my own decision.

      Good luck!

      Disclosure: APPL long since 2007

    3. Oh, I remember when Apple was $12. March 2003. They had $10 a share in cash back then. There was a WSJ article about it. That was pre-split, so it’d be $6 by today’s prices. I bought some, but sold. I bought some more at $20, when I knew iPod sales over Xmas were going to be good, and sold at $26. I didn’t get back in again until $96 in Feb of 2007. I’ve been heavily invested in Apple ever since.

      If you had spent that $10k on Apple, you’d have $1,000,000 today.

      1. :(. Worst yet, when I finally convinced my dad to buy..he bought a lot at around $70. His “financial adviser” freaked and convinced him to sell when it was mid $80s. About $10 a share profit in a year isn’t too bad…but think of what he’d have now if he just stuck with it!

  5. stock trading is not easy, however obvious something may be. aapl may be at 10000 in a few years, yet it’s still hard to put money to work at 580$. It’s not the company people fear, it’s wallstreet and manipulation, and outside events that have nothing to do with apple the company.

  6. Back in 97 I think I was on a Mac IRC channel and AAPL hit a new low. Everyone was saying what a bargain it was, lets go buy some. So I did. A year latter AAPL was up pretty good and everyone was complaining how they should have bought Apple stock. Wait, I thought we all did? =)
    I still have it all, two splits later. Though that’s not as impressive as it sounds, I was pretty poor back then and didn’t buy a lot.

  7. Nicely written Tom Koger. I got my first shares during the Y2K bubble, got more half way down and more again when it tanked. I have almost always been invested in Apple from then to now. Those that understood what Apple was and could be have done well. I consider myself a grateful believer and hope to retire this year from mainly what AAPL added to my portfolio.

    You stated it well, “It’s like they have just discovered a company that was already there.” They were sucked in with the bears as they played Steve Jobs pending death against the stock value never seeing the once in a life time gem in front of them. Steve Jobs will be missed. But always remembered!

  8. Apple is unique. The analysts are constantly trying to compare it with historical data, failing to recognize time and time again that Apple is creating its own destiny… its own history. There really is nothing to compare it to but itself.

    Thank you Steve.

    1. +1 Anal…ysts keep trying to make magic out of pure numbers. W. Buffett said know a company that you like how they operate? Then buy their stock. So I did. Not much but a few shares.

      Just a thought,
      en

  9. I bought 150 shares of AAPL back in 2000, just for the hell of it. Since then it has split at least three times. My biggest regret is that I didn’t buy more back then, when it was so ridiculously cheap.

  10. I’m not “stupid” but perhaps “foolish” to have held on to my modest investment since 2000 in good times and bad for Apple. Underlying it all was my “foolish” unshakeable faith in Steve Jobs. So on my modest $7,000 investment then and seeing it drop to $3500 at one point during that 2000-2012 time period, I have been rewarded by stock worth now almost $200,000. The only question is when to sell, now or in the future. I think the future though my wife is chomping at the bit. Apples growth story IMHO is just beginning. Maybe when it doubles again as it surely must?

    1. Mine is a similar story.. Bought in @ $10/share in 2000. Bought some more while it was still below $200. Now worth over $100,000.

      Thank you Steve. Thank you Apple!

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