The worst mistake Apple investors can make

“In 2014, Apple (AAPL) was a darling of the market all year long. Shares of the technology giant gained roughly 40% in 2014, compared to the market’s 12% gain,” Bob Ciura writes for The Motley Fool. “Recently, Apple’s stock price has taken a dip due to the sell-off in the broader market. With such impressive gains in the book and Apple’s stock price looking shaky, it may be tempting to take profits and sell out. But that would be a huge mistake.”

“Based on the product releases that will boost Apple’s profits in 2015, I’m betting the company will out-perform its rather modest expectations. Analyst estimates still look too low considering the many catalysts Apple has working in its favor, and if Apple can manage to top these projects, its valuation multiple is likely to expand,” Ciura writes “And, there’s always Apple’s dividend, which is surely set to grow as its earnings grow, too. Apple pays a 1.7% dividend yield, which is slightly below the market average, but Apple increased its dividend by 7% in 2014 and by 15% the year before. The $11 billion in dividends paid to shareholders in fiscal 2014 accounted for just 22% of Apple’s free cash flow. That leaves plenty of room for future dividends to grow at double-digit rates.”

Read more in the full article here.


  1. AAPL will do good in the the long term. But to be realistic, this stock can go down due to (sometimes absurd) market forces, as it is doing right now. If market troubles persist, it’s entirely possible it could keep AAPL going down for an extended time. Like most stocks, the short term risk is high for AAPL.

    The really important thing for any investor to know is their own time frame and risk tolerance (the two should go hand-in-hand.) A long time frame (at least 5-10 years) allows you to accept higher risks. A stock, or the entire stock market, could tank 50%, and and the investor is still likely to come out ahead over a log time frame. Anyone fully invested in the stock market for nearly any 10 year period, even ones that included the great depression or great recession, still come out ahead, because recession years get surrounded by growth and recovery years.

    If you have a shorter time frame, then you are more vulnerable to risk. AAPL could tank (due to market forces outside of Apple’s control), and it could take a long time for it to regain its previous value. If you might need your money back sooner rather than later, it’s entirely reasonable to sell AAPL now, while it’s still high, to lower your investment risk.

  2. One of the worst things for Apple shareholders to do is try to figure out why Apple’s movement is the way it is on a day to day basis. None of it makes any sense to me. I believe Apple has done as much as it could to try and stabilize the share price but it doesn’t seem to have any noticeable effect over the short term. That’s alright because those who do believe in the company will be buying on down days. I’m sure Apple must be taking advantage by buying back its stock on days like these. Although I don’t quite understand the reasons for Apple’s continued volatility, I do see it as something that can be used to an investor’s advantage.

    However, this recent BlackBerry incident showed me where investors’ heads are. Throwing money at a stock because of some buyout rumor is pretty much something gamblers would do.

    As for Apple’s share price being down today, I’ve seen nothing negative to drive the stock down further than most tech stocks which leaves me somewhat puzzled in regards to cause and effect. However, I do think the stock will recover most of its losses towards closing time as some entity tries to gobble up shares.

  3. It is hard to understand when Apple stock rises 3% on day and then drops the same amount the next day. The type of volatility is typical for aapl though and for the long term investor like me we have to simply ignore it.
    What I would love to know is what funds are buying and selling during this time. Are the manager using fund cash (i.e. investors money) to cause these large swings so that they and others can profit?

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