Why Apple might be the only investment you want to own

“The great Peter Lynch – a mutual fund manager at Fidelity – turned $1 into $27 with one simple strategy,” Jason Cimpl, Research Analyst at Wyatt Investment Research, writes for Seeking Alpha. “He delivered average annual returns of 29% to investors in his fund over a 13-year period by following a very basic investment principle: Invest in what you know.”

“Information is moving fast and it’s tough to stay current – even for an analyst like myself who follows the news daily. That’s why it’s important to take the Peter Lynch strategy of investing deadly seriously,” Cimpl writes. “So you understand Apple… but let me show you why AAPL is a great stock to own ahead of its [quarterly earnings] announcement [next week].”

Cimpl writes, “First of all, despite its huge size and fast growth over the past decade, Apple is still a rapidly growing company with several smash hit products… However, AAPL also carries something else that makes it a stud investment: cash. And cash is essential in an uncertain economy. Fortunately Apple has nothing to worry about when it comes to cash. The company’s cash stockpile recently swelled to a staggering $100 billion. To put that in context, Apple’s cash position is larger than the market caps of 95% of the companies in the S&P 500.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Carl H.” for the heads up.]

32 Comments

    1. 401k 🙂 about nine years ago!!!!

      I still believe in AAPL towards 2015. Buy BUY 🙂

       iBuy 
      2012 = $646
      2013 = $792
      2014 = $898
      2015 = $1055

  1. I actually quit my job and went freelance so I could rescue what was left of my 401k and put it into an etrade rollover account.

    That was early 2010, 401k is 90% AAPL, doing well…

    1. Great, Silverhawk. How’ve your returns been over the past 10 years? Doubt they were anywhere close to AAPL’s.

      Those holding AAPL as a primary (or only) in their portfolio keep a close eye on it. Watching it carefully and being ready to withdraw is certainly warranted. There are indeed warning signs to watch out for. Losing SJ was one of them. So far, we’ve survived that even better than I had expected. Seeing what vision still exists is another. (We won’t know that for a short while more.)

      Other than those cautions, which should be the same with investments in other stocks, keeping an extremely top heavy AAPL portfolio has been the sensible thing. Leaving out AAPL in favor of the standard “balanced” egg investment hasn’t been conservative, it’s been foolish.

      If you had invested heavily in AAPL 10 year (even 5 years) back and have now taken profits because your comfort level declined, I would understand that. But the long held mantra of not “putting eggs in one basket” has not been an effective strategy where AAPL has been concerned. Under normal circumstances, yes. AAPL increasingly falls outside the norm. Things do change. But they haven’t yet.

  2. You would NEVER catch Peter Lynch investing in only one stock … or only 20, either. He always invests in large numbers of stocks. Frequently more than 100.

    Other Peter Lynch investing ‘rules’ are inconsistent with the advice of this article. Lynch likes unfollowed/undiscovered stocks. He likes stocks that are somewhat distasteful, such as a casket manufacturer.

    The only Peter Lynch principles that endorse Apple as an investment: 1-Low PEG ratio and 2-you use the company’s products.

    1. More than 20-40 stocks is a waste as far as diversification. When you get near 100 you actually start having a reverse effect where, unless you plan to buy and hold all stocks you are going to get hit with a lot of transaction fees, and you won’t have enough time to properly assess the performance of all those stocks. Even 40 is a bit high for an individual investor.

      There are probably solid reasons why he’d own 100 sticks but diversification cannot be the reason.

  3. Investing 100% of your money in a single stock is about the dumbest, most asinine thing I have ever read at MDN. Only a brain dead moron would follow such advice. You would have to be one of the biggest idiots in the world to do this. Pure lunacy.

    Of course, the rabid, drooling, diaper wearing fan boys will love this “strategy” a lot.

    1. So you got a 4000% return over the last 9 years on some other investment? I might be stupid, but “stupid is as stupid does” and this “stupid” has done VERY, VERY well.

        1. No you don’t, you love us, that is why you are here and have so much passion. The site is for lovers of all things apple and you love apple fan boys, it is obvious

    2. I, too, have a fairly sizable block of retirement money in AAPL (fairly sizable for a 99%er, anyway). But it is more like 20% of my total rather than 100%. It started out a lot lower, but Apple’s performance has been phenomenal, and I am comfortable maintaining that level of exposure given my understanding of Apple’s products and position in the market.

      For those who are going all in: When investing in a single stock works, it tends to work very well. But, when it doesn’t, you can lose a lot of money…sometimes all of your money. Enron might ring a bell with some people. That debacle resulted in a lot of ruined lives and suicides. Be careful in advising your friends and family to take on the same level of risk. Advice given is responsibility taken.

      The joker is fundamentally right. Those who have had success with investing 100% Apple are very fortunate – they chose a winner. But do not use historical returns as a justification for a risky investment going forward. Keep your eyes open. If you have the resources, then it might be worth hedging with options to protect your downside. You lose some return, but gain some peace of mind. Anyway, just remember that higher returns tend to be associated with higher risks over the long term. If you get your a$$ handed to you five or ten years down the road, it is your fault. Don’t come running for a bailout.

      1. I personally would NEVER advise anyone, including friends and family, to put everything into AAPL. What I do for myself and am willing to watch closely, is a different matter. I have money in other stocks, not always of my choosing though. As Zeke mentioned, there has been an enormous upside for AAPL in the past and that continues. Risk? Absolutely. There is risk in ALL investments. And I am constantly monitoring news. They keep a lit close to the vest, but the Mac community keeps much out in front and that is helpful conversation for keeping tabs on possibilities. Few other stocks have that group constantly discussing what it’s doing as Apple “enthusiasts” do. Overall, I feel AAPL is quite safe for the time being. And since many people have AAPL investments originating many years ago, any potential for loss of original principal is often greatly reduced.

        I’m not sure on what you base designating future holding of AAPL as “a risky investment going forward.” Do you know something specific the rest of us don’t?

        And, if you are suggesting that some people might get their “a$$ handed to them FIVE OR TEN YEARS down the road,” perhaps you have neglected to account for the (potential) enormous increase in their AAPL portfolio that long down the line prior to the great collapse. For me, I feel there is likely to come an end to the ecstasy well before that. Keeping a close eye out and having a workable exit strategy should minimize any potential “losses.”

        I see some overall problem with the economy as affecting AAPL far more than what the company itself is doing. To this point, the company is quite solid. Would you not agree?

    3. There’s a lot of people who give self serving advice that leads to people like you who know nothing about investing but think you do, so you think this is a bad idea.

  4. Rolled the Dice ….. Got a Home Loan …. Put $200K into Apple ….

    Today it is worth 3X that and I took out $40K and $100K and my Home Loan is down to $185K but I can pay off anytime …. So all told I am up some $550K ……

    $100K just purchased a Rental Property – CASH – 2 months ago and the $40K was for a new car ….. Got a heck of deal on the house and wife 14 year old car was replaced …..

    The only stock I own is Apple – ALL-IN-BABY ….

    In my 401K I only own Mutual Funds and that money is treated differently ……

  5. Took out a loan for 1.39. Bought bananas and cornbread. Told the guy whop loaned me the money that I couldn’t pay him back. He said, “that’s okay. gimme some of that cornbread”. We both ended up well fed and happy.

    1. I bought beans from the guy who sold Jack his beanstock beans. I climbed the beanstock, ate the giant’s cornbread, made love to his wife and took his bag of gold coins.

  6. It’s better to diversify. I lost 150k on paper when tech went south a decade ago. I was lucky I had some bland non-tech stocks that softened the psychological and emotional beating I took in tech. My portfolio is skewed toward the tech sector but is partially balanced by other sectors. What I learned a decade ago is wealth on paper can be lost in a heart beat. Talking heads are just guessing too. Another thing, enjoy some of your disposable income “Along the Way”. Before another major correction I decreased my position on all my stocks and purchased a new Jag. AAPL shareholder

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