How much Apple stock is too much?

“Like many Apple fanboys (and fangirls), David Howard owns an iPhone, iPod and an iPad — not to mention a sizable chunk of the company’s shares, which comprise about 25% of his portfolio,” Reshma Kapadia reports for SmartMoney. “And the Austin-based mechanical engineer would like to add to his investment, but his financial adviser is trying to talk him out of it.”

“It is a message many financial advisers are preaching, even if clients don’t want to hear it,” Kapadia reports. “Some say they have had clients who rarely comment on portfolio strategies call to complain when an adviser sold Apple shares.”

Kapadia reports, “Amid the near unconditional love from analysts and fund managers for the world’s most valuable company — and the consumers who adore all-things Apple — some financial advisers are questioning how much of a good thing is too much. They say many of their clients are overloaded with Apple shares, not just through individual stock but also through other holdings as fund managers have piled in.”

“To be sure, most investing pros — including the advisers trimming shares — remain big believers in Apple’s long-term growth prospects. Plus, the company’s decision last week to begin paying a dividend of $2.65 a share arguably makes the stock even more attractive to long-term investors and retirees,” Kapadia reports. “But the problem, pros say, is that clients’ growing positions in Apple means less-diversified portfolios.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “James Wigg” for the heads up.]

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Apple shares hit new all-time intraday, closing highs – March 27, 2012
U.S. elections: Time for investors to worry? – March 27, 2012
Apple’s devoted shareholders get rich, and hang on – March 23, 2012

55 Comments

      1. Diversification? That’s when your losses cancel all your gains.

        I bought 1000 shares of AAPL in 2003. You do the math. For the last 9 years I’ve heard from the “experts” why I should sell AAPL every day.

    1. Some is OK, but taken to the typically recommended extreme the “pros” would have you always selling your winners to buy more losers. They call it “rebalancing.”

    2. what diversification should have said is…

      load up on AAPL and buy quarterly option puts… ‘watch very carefully’? what does that do…

      Anyway, AAPL dividends alone you can buy up options puts for those days AAPL drops big on manipulation…

      Had i left all my eggs in AAPL like i originally planned, i would be set..

    3. I have 95% of my portfolio invested and diversified in the mobile phone market, the computer market, the software market, the media market, cash, electronic publishing market, … and it is called AAPL. Been in starting 2000. Popped in and out and started digging in in 2006. Kept buying after 2006 on with only some selling. I am retiring this year with the “Houses Money”. I should start to let up in 2 or 4 years.

      If AAPL was a mutual fund or a type of ETF that grouped things together, these talking heads would be Ok with that. Idiots! Growth is king. For 9 years I averaged 37.6% growth. This year is higher. If some day I loose 10% or 20%, Ok! Then I would have about 27.6% to 17.6% that year!

    1. That quote attributed to Andrew Carnegie. He said, “”If you have 4 projects you can only give each one 25% of your attention. If you have two projects you can give each 50% of your attention. Therefore, put all you eggs in on basket, then watch the damn basket.”. It’s what I have been doing since 2004. No regrets

  1. I’ve made more money in Apple stock and a few other self-picks than all the mutual funds I’ve ever had with my 401K.
    Two years ago I invested everything into Apple stock. The way I look at it, even if the stock goes down 70% I’m just back to the returns I would have gotten with my “professionally managed” mutual funds.

    1. +1

      First of all, I’ve never met one really rich person who has a 401K. Second, every so-called “financial adviser” I’ve ever spoken to still says to put money in MS. That’s all I ever needed to hear.

  2. 73.5% of my portfolio consists of AAPL…
    Financial advisors? my bank proposed to buy Lehman Brothers in summer 2008. I ignored them and continue to do so.

    1. A wise man, Ralph. Perhaps not a wise investor though. Ralph probably never watched as his “fav” stock took a nose dive. They all do. Eventually. Anyone who does not understand that should not be investing in equities. I’m long AAPL but I’m more cautious now. I’ve pared back on my AAPL. But I was never a buy and hold guy anyway. Buy low sell higher. Wait for your op and buy back in. Should be a good buying op soon. Have dry powder. AAPL call and put options are the way to go. Loving Apple products and investing have nothing to do with each other. As for diversification, it’s just common sense. Besides, there are other companies. I have done quite well this year with MCD, PCLN,NFLX and a few others. Just don’t stay too long in anything. Buy and hold is not the best way to optimize your chances. But each to his own. I just can’t wait for a good chance to load up on some more AAPL calls. C’mon Apple, drop like a rock. I only need a small opening.

      1. On my birthday in 1997 I bought 1,000 shares of AAPL at, then, $13.69 and have sat on them since then. With the exception of 15 shares given to each of my three grand kids, the rest are sitting there to this day. Tell me how well you’ve done in comparison!!

        1. Much better genius. I don’t sit on my shares, or options, I make money with them. Geez! Surely you do understand that you have had many more opportunities in those fictitious 15 years to have made much more money than to have bought and held? You still haven’t made any money because you haven’t sold them! Its all paper profit. Never mind, just sit on them. They’re a dream anyway.

      2. Spouting the common wisdom. When AAPL fell from 200 to 78 I not only held, I bought more. My buy and hold strategy has produced a 100X increase in my accounts. Diversification is NOT common sense. There is one best investment out there. Why would I put any of my money anywhere else? As for AAPL dropping like a rock, those days may be over. Apple is paying a dividend going forward. That’s going to first increase the price, then stabilize it. That’s fine with me. It means I can retire this year. Let’s see, Maui, or the Bahamas?

        1. I am retired. Mostly because I invested wisely. A whole lot of it was AAPL. But I also invested in other companies and even gold. AAPL has had a nice run but I have done very well in other stocks too. Actually I have made more money in PCLN than any company including AAPL. And when AAPL dropped from 200 to 78 you had no choice but to keep your shares because you just lost the opportunity to cash out and THEN buy more shares. That was more than a 50% drop! It’s nothing to brag about. Thats what you DON NOT want to do! C’mon, think a little.

          1. Glad that you have a crystal ball that notifies you of coming crashes. Most of us that have been at it a while have learned that as a retail investor you stand little chance of beating the institutions at trading. When I want to speculate I buy or sell options. My core position was and will remain “buy and hold”.

            Congratulations on your PCLN trading. Very lucky. It has no fundamentals, no moat, and no headroom, but it has a trend. I would never “buy and hold” it. I hope someday you recognize the difference between stocks like PCLN and AAPL.

            1. I do and have for many moons. I’m glad that you too have a crystal ball that lets you know that a stock (in this case AAPL) will never crash. I have been at it for more than “a while”. I’m amused that you find me “lucky” to have done well (that’s an understatement) in PCLN. If you do your due diligence you will most often succeed. I love Apple products. Have used for more than 30 years. So I’m no newbie to AAPL. But to invest in a company,no matter what company, you have to remove emotion. When you become more experienced you’ll understand. That said, I’ve made a ton on AAPL. And I don’t buy and hold. Up $7 today and I sold my April calls. I’ve held them since the beginning of March. No way I could have ever made that kind of money by buying the stock. It’s simple math. Good luck.

            2. Oh, you mean like my AAPL Jan 2008 $150 calls bought in Jan 2007 for $1 and sold Dec 2007 for $60? Yeah, when I “become more experienced” I’ll be sure to do more of those.

  3. It’s not as simple as saying diversification is for chumps. Most of us happen to be benefitting from extraordinary success with our AAPL shares, but in a sense we’re quite lucky. Had any of us thrown everything into Crocs or Krispy Kreme we’d be singing a different tune about diversification.

    1. Your logic is so severely flawed it’s hard to pick where to begin.

      Do you really think aapl investors are plain lucky? That people basically just randomly pick a stock to buy and hold? That it could have easily been a matter of holding crispy here ins tea dog apple? give me a break.

      As any serious apple investor here, and they can rattle off many reasons they not only chose to buy aapl, but then hold onto it. As a company, apple has been very deliberate about there success, not just lucky.

    2. Lucky? In 2003 I saw the new OS X operating system. Being familiar with computer technology, and especially the BSD Unix that Apple based OS X on, and realizing just how truly awful Windows was under the hood, I could see that Apple eventually would displace Microsoft. Microsoft died with the decision to produce Vista instead of its own industrial grade OS. It was a no brainer. Microsoft’s stinking corpse has been rotting for a few years now. It won’t be much longer before the scavengers disassemble it completely. Luck? Never.

  4. my younger brother who is very well off, decided to open an IRA with one single investment. He bought $100,000 worth of Apple stock at $110 and just let it ride. It certainly is far from his only investment but for a one stock IRA he is doing pretty well. Do the math.

  5. Diversification is important, but not for the sake of simple diversification. My portfolio is heavily AAPL, but I consider myself a fairly educated investor in the stock.

    The most telling line of this article is the quote at the end. The ride upwards will eventually end. That doesn’t mean there will be a crash or a hard fall, but eventually the upward momentum will ease. Until then, enjoy the ride….

  6. 100% of my portfolio is comprised of apple. What has it done for me?

    I have earned over 60 grand. Thank you very much. Now, this is why I will manage my own portfolio as I see fit. Have a nice day.

    1. It’s not 60K until you sell the stock. I too have made a killing off AAPL this year. Bout 125 K in the last 5 weeks. But you have to execute. Sell the stock, sell the call or put but execute. Try not to be the one standing when the music stops! But you are wise in investing your own money. Because you know you can trust you.

  7. Diversification is for when you don’t know anything about anything, then you want to reduce your risk as much as possible.

    When you know something about an asset, then by all means use that knowledge to your advantage.

    If advisors tell you to sell your winners, then they are clueless about portfolio theory. You set up your asset allocation, from there, some assets go up and some may go down. Rebalancing only defeats the purpose of the original allocation.

    If advisors tell you to sell, you should find a new advisor.

  8. One could responsibly add to positions until it turns, raising your average price, but continuing to maximize profits. I would have thought the psychological level of $500 would have slowed things more, but the crazy success of the last quarter, the dividend and buy back announcement, and continued innovation make it more than solid still. The harder question is whether new investors should consider it. That is a much harder call.

  9. My primary IRA consists entirely of AAPL. It will continue to do so until I believe that the company is no longer the best place to put my money. Right now, they’ve opened up huge markets around the world and are nowhere even near the saturation point- on top of which, consumer electronics are products that evolve and are repurchased. No, we’ve got a while to run with Apple. What is happening lately is that more people are beginning to recognize the size of the addressable market and that Apple actually has the ability to execute worldwide. And they’re flocking to buy the stock, as well as the products, because nobody else’s products are worth owning.

    1. true. It seems the last decade was Apple setting itself up for this coming decade. Apple has strong, but small positions in each of its key markets (except for the iPad, where they own the entire market, but the market is just getting started).

  10. I borrowed $200,000 to put in a diversified managed fund in 2008. I’ve always been an Apple watcher but couldn’t justify putting it all in one company (especially after AAPL’s sharp drop amid the GFC).

    These days my fund is down 40% and AAPL is up 500%.

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