Legendary investor Peter Lynch has a winning investing track record, but he still has regrets for not buying Apple shares when they were cheap.
Lynch famously managed Fidelity’s Magellan Fund from 1977 to 1990 during which time the fund earned an annualized return of 29.2%, consistently more than doubling the performance of the S&P 500.
The former Fidelity Magellan fund manager revealed Tuesday that he wished he hadn’t missed out on the explosive growth in Apple.
“Apple was not that hard to understand. I mean, how dumb was I?” Lynch, vice chairman of Fidelity Management & Research, said on CNBC’s “Squawk Box.” Apple has a “nice balance sheet. I should have done some work on Apple… it’s not a complicated company.”
Lynch recounted how his daughter had bought an iPod for $250 at the time and how he recalled thinking Apple was making a high margin on it. Yet he didn’t buy the stock.
Lynch, 79, acknowledged that Warren Buffett saw Apple’s potential and capitalized on it. The “Oracle of Omaha” had shied away from tech stocks for decades, claiming they were outside of his expertise. But under the influence of his investing lieutenants, he bought into Apple in 2016 and made it his single biggest holding in his portfolio.
MacDailyNews Take: Those who have iron stomachs in the face of risk, year after year, can make millions of dollars with relatively very little invested, if they go “all in” on the right company long term.
Diversification is protection against ignorance. It makes little sense if you know what you are doing. – Warren Buffett
On December 20, 1996, when Apple announced the acquisition of NeXT and the return of Steve Jobs, an Apple share sold for 18-cents.*
As recently as April 2003, Apple shares sold for 20-cents each.* Even on January 07, 2019, Apple closed at just $35.64*!
Anyone who invested in AAPL, even in later years, without the loss-making hedges in the name of diversification, sports an incredibly better annualized return than “legendary investor” Peter Lynch’s 29.2% (which is rather laughably weak when viewed by long-term, mainly AAPL investors).
The actual “legendary investors” would be those who began buying AAPL upon the return of Steve Jobs, never stopped buying AAPL year after year, reinvested dividends in AAPL every quarter, never wasted money on diversification in the name of mitigating risk (which also, in the absence of investing perfection (which does not exist), mitigates profit), but who instead went all in on AAPL and never sold a share.
*Prices adjusted for splits and dividend distributions.
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A friend and I both bought AAPL when the iPod came out. We both used Macs, thought highly of the company, and really loved our new iPods.
The share price doubled.
His broker convinced him to “take the profit”.
I held, and bought more.
Split adjusted, the shares were less than $1 back then.
The reason I held was actually something Warren Buffet had said about Coca-Cola back in the 80s or 90s. He’d bought Coke shares back in the 50s, and he said something like (totally mis-remembering the details) “30 years later, now that the shares are $86, did it matter if I had paid 76¢ or 86¢ or even $1.06?”
(Of course this is all prefaced with Warren Buffet’s standard disclaimer “If you buy a good company.”)
He found another “Apple” called Chrysler
AAPL was my first-ever investment. Jobs returned – and I really didn’t know all that much about him. But once he slashed over 3,000 jobs (which the arrogant Engineers declaring “they will die without me” attitude), and he turned a $1b quarterly loss into a $49m quarterly profit, I figured he knew what he was doing. iMac solidified it, CompUSA store within a store, with people leaving with iMacs in their cart – I got in around $9 a share. Even Sony figured why buy Apple when they were irrelevant and going out of business? Ha!
Fast forward 25 years later and AAPL paid off my house 9 years ago, and what was left over and it is still the largest growth and major chunk of my holdings.
I purchased $1,000 at $9 a share, then I purchased another 25 shares at $45 a share. If I never needed to sell, it would be somewhere close to $1 million, perhaps more? I dare not calculate it to the tee or I might be sick. Ha!
Suffice to say, my first-ever investment was likely something I will not be able to replicate again, but I do have other pans in the fire. We’ll see…
To even out my “brag” with humility, I also was thinking of investing in Tesla, at around $35 a share, but figured it might go bankrupt, and I would need to do some homework before investing. I never did… 3 months later it was at $75 a share and I thought I had missed their big rise. LOL! What a brick that was!
For ref; I worked at Apple when the colored one-piece iMac was gaining (a lot) of steam, but I will never forget the call into a business and the guy chuckled while he asked, “so you work for the company that sells the colored iMac” (implication = toy)? I confirmed. I was relatively new at the time and I thought, wtf did I get myself into?
Years latter I called into a university and the person I called was in a meeting. He initially balked, but then he asked with clarifying interest, “you said you are with Apple,” When I said “yes,” he told the person he was with, “I need to get this call”.
The tide of interest and respect had changed profoundly.
In early oughts, the meme, “Apple was a 25yo start-up”…risky and susceptible. After all, Apple nearly died in ’97. This view was pretty pervasive.
I don’t remember the .20/share price in 2003 (perhaps split-adjusted), but I do remember purchasing, with employee discount, just below $6.
Bwahahaha….1996—I did! Came home from watching the iMac introduction and immediately called my back-in-the-day Stock Broker (who tried his best to talk me out of it). Sold it ALL twice. Once when Steve announced his Cancer (then bought it all back after things looked OK with Tim at the helm). Then when Covid hit, sold it all, bought half back a few months later, when it appeared stock market had reached its low point (I fully expected a total world crash). But I didn’t dare re-invest all of it, shoved half into high interest CD’s etc for low risk in a crazy world. The world looked (and still looks) too shaky. My remaining Apple Stock is my emergency fund.
April 25th, stock market: “Oh Shit!” and retirement investment portfolios all across the USA: “FJB!”
(reelection, yeah right. Have to be elected to seek relection. Argue this and you are a stolen election denier and a coup d’état enabler.)
I came close to buying AAPL several times, most recently in 2009. Since then it has grown 50x. Colour me stupid.
Nitpick: iMac introduction was ’98.
A coworker bought 1000 shares of AAPL in 1997 when it was $4. If he kept all of them, because the stock split 5X (2,2,2,7,4), he would have 224000 shares which are worth US$36,684,480 at market close on April 25th. Not bad for an initial $4000 investment.
I bought our son one share of Apple in 2005. I paid $49. Today, after splitting, those 28 shares are worth $4,611. I laugh about it every day.