The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: seeyalater on August 12, 2019, 03:17:36 PM
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Hi Everyone. I just recently discovered this forum/blog and so glad I did. I have tons of questions, but I'll start slow.
I'm in my 40s, married with 3 kids. Self Employed making about $120K/year, Wife about $50K. We have about $250K equity in our $550K house with about 12 years left on mortgage @ 3.75%.
About 10 years ago I decided to put all my savings in AAPL and today it's worth about $600K which is freaking amazing. I'm not sure how much longer I want to keep all my eggs in AAPL, but not sure what I should do. Take 50% of it out, pay the 15% tax on that and re-invest in something else? Sell it all? Leave it alone for another 10 years and hope it doubles?
Besides about $175K that I have in a Simple IRA (VFORX), the AAPL money is all we have for savings.
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Holy crap that is terrifying...
The AAPL is in a taxable account, not a retirement account? You definitely should start diversifying. I would recommend index funds. They already hold plenty of Apple stock (VTSAX is 2.8% Apple). Selling half this year doesn't sound like a terrible strategy (and maybe the other half next year).
Have you read JL Collins' stock series?
https://jlcollinsnh.com/stock-series/
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Congrats on picking a winner!
You got in at about $30/share (split adjusted) and now it's at $200/share. In the meantime you got some fat dividends (re-invested or paid out in cash?) Now you're set to get about $2250 per quarter ($9k/year) for just owning the stock. And the dividend will just keep rising. As AAPL shrinks their float (currently 4.5b shares, down from 6.9b after the 7-to-1 split) and diversifies into more sectors, the money will just keep rolling in. What's not to love?
This is the power of the stock market to make middle class people wealthy. Your money has earned you over $500k (round numbers) in 10 years. That's over four years of your income in 10 years!
However, at some point, it is wise to diversify. Look at Enron, WorldCom, Lucent, GM, Delta, MySpace (Rupert Murdoch squandered $500m buying it), or GE (circling the drain), and you'll see once high-flying companies, slam-dunk investments, that are now no longer anywhere to be found. It's hard to pick winners, so lots of people around here will recommend VTSAX to you.
As you might have guessed, I have both AAPL and VTSAX. Since I have a hard time selling AAPL and buying VTSAX, I still own more AAPL than I do VTSAX. I take my AAPL dividends and invest them in VTSAX as a way to slowly balance the portfolio.
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You are taking on incredible, breath-taking, uncompensated risk. You got lucky. Congrats. But please remember that you are lucky, not smart. In your shoes I would be too scared to sleep at night and would do anything under the sun to sell everything Apple and convert it all to a broad index fund. Personally we are in a 60/40 mix of VTSAX and VTIAX (Total stock market and total international stock market).
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Way to go on your AAPL shares.
Put your new money into another investment. I think diversifying is good, but AAPL is still a great company, so don't feel like you have to rush out of it. I would aim to get at least half of it into something else over time.
Karen
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You are taking on incredible, breath-taking, uncompensated risk. You got lucky.
Uncompensated? Really? He's up 7x his original investment in 10 years. That sounds like great compensation to me. If I were in his shoes my only regret would be not investing more, or else not investing the same amount another 10 years prior.
If you'd invested in the Dow at it's all time low this century, March 3, 2009, (6500 points), then the Dow would have to be well over 40,000 points to match his returns (now its around 25,000 to 26,000). So, not only has he been very well compensated for his risk, he's beaten the market!
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Reminds me of a parable:
Man hears about a company and thinks it could be worth a fortune some day, so he invests half his savings. The company's stock goes through the roof and he uses the some of the proceeds to pay for his children's tuition, all the while thinking: "how smart am I!?". Then he hears about another company and invests the rest. The company goes bankrupt, and he thinks "how unlucky am I!?"
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I would go online and order a used copy of CFA level III textbooks and look up “hedging a concentrated stock position” in the private wealth management section.
I’d then learn the very basics of options strategies.
I’d then learn the tax law regarding “constructive sale”. This is key to your hedging strategy.
Then i’d implement the above to remove tha vast majority of your single name risk in apple and swap the risk into index ETF’s without selling the AAPL stock and realizing taxes.
It should take you a weekend and is more complex than selling, but your deferred gain is large enough that you could save some real dough. AAPL is super liquid and has a robust options market, so this should be easy to implement.
Just think of yourself as an AAPL executive who can’t sell stock, but doesn’t want to own the downside risk and upside in only one company.this is a common occurrence and many strategies exist to take care of it. Goldman Sachs and the like will charge you an arm and a leg to implement t for you, but be mustachian and DIY.
Congratulations on your awesome investment.
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That's an awesome success story. As others have mentioned, it is terrifying to me to be in a single stock.
Personally, I would diversify between S&P 500 index and bond funds. You could keep some of the Apple stock as as a smaller portion as well.
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You are taking on incredible, breath-taking, uncompensated risk. You got lucky.
Uncompensated? Really? He's up 7x his original investment in 10 years. That sounds like great compensation to me. If I were in his shoes my only regret would be not investing more, or else not investing the same amount another 10 years prior.
If you'd invested in the Dow at it's all time low this century, March 3, 2009, (6500 points), then the Dow would have to be well over 40,000 points to match his returns (now its around 25,000 to 26,000). So, not only has he been very well compensated for his risk, he's beaten the market!
We agree that he got lucky. I mean the textbook definition of uncompensated risk when it comes to investing.
https://en.m.wikipedia.org/wiki/Uncompensated_risk
“, if you owned only an individual stock or only a single market sector you would have significant uncompensated risk. By investing in one stock or one single market sector, you are not compensated for that extra risk (since that risk can be diversified away by owning the Total Stock Market). You should expect to get the same return as the market, but you have a lot more risk in your portfolio.
The efficient market hypothesis states that you are not rewarded for taking uncompensated risk.”
Investing in stocks versus bonds is taking more risk and therefore we expect (and with a broad index fund receive) higher return for that risk. With a single stock you are taking on magnitudes more risk without an average expected return that is greater than a broad stock market index. The standard deviation is much higher. You could get very lucky as this OP has been and you could also have your entire investment be wiped out, as has happened with examples already mentioned in this thread.
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You are taking on incredible, breath-taking, uncompensated risk. You got lucky.
Uncompensated? Really? He's up 7x his original investment in 10 years. That sounds like great compensation to me. If I were in his shoes my only regret would be not investing more, or else not investing the same amount another 10 years prior.
If you'd invested in the Dow at it's all time low this century, March 3, 2009, (6500 points), then the Dow would have to be well over 40,000 points to match his returns (now its around 25,000 to 26,000). So, not only has he been very well compensated for his risk, he's beaten the market!
We agree that he got lucky. I mean the textbook definition of uncompensated risk when it comes to investing.
https://en.m.wikipedia.org/wiki/Uncompensated_risk
“, if you owned only an individual stock or only a single market sector you would have significant uncompensated risk. By investing in one stock or one single market sector, you are not compensated for that extra risk (since that risk can be diversified away by owning the Total Stock Market). You should expect to get the same return as the market, but you have a lot more risk in your portfolio.
The efficient market hypothesis states that you are not rewarded for taking uncompensated risk.”
Investing in stocks versus bonds is taking more risk and therefore we expect (and with a broad index fund receive) higher return for that risk. With a single stock you are taking on magnitudes more risk without an average expected return that is greater than a broad stock market index. The standard deviation is much higher. You could get very lucky as this OP has been and you could also have your entire investment be wiped out, as has happened with examples already mentioned in this thread.
Or in other words, compensated risk can only be known with hindsight!
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I'd suggest you sell half of this position today, take the Long Term Capital Gains tax hit, and go buy an SP500 fund (VOO) with that at Vanguard.
This will leave half of your "winnings" in a boring investment, and the other half in a massive gamble!!
Every year, hack some bit off the AAPL gravy train and put it into VOO! Do this till AAPL is < 25% of your net worth, less if you want to take more risk.
Traditionalists will chafe at the 25% exposure to a single stock - but I recon that will be required to satisfy your gambling urges, AND it won't kill you to lose that!!
The first year you will take a massive Capital Gains tax hit. However, this is necessary! You are gambling everything on Cook's ability to keep the AAPL's creative juice running. That's a massive gamble on a single something you don't control!!
The tax hit is well worth the risk reduction in going from 100% gambling to a 50/50 mix of gambling/investing!!
The gradual hacking away after that is to reduce risk in a more tax efficient way.
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I live in Apple country and am within walking distance of the spaceship campus right now, as a matter of fact. The sentiment among the folks I talk to who work in consumer hardware (where I work now) is that Apple hasn’t come out with anything truly exciting in some time. Really, since the first iPhone. They have lots of cash and hire lots of people but around here it feels like they are stagnant. I can’t predict stock prices at all, which is why I don’t even try, but if I did, I wouldn’t bet on Apple. Then again, I’m always wrong with stock feelings so maybe that actually means they will do great? Haha
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Seems like 15% of your AAPL winnings will be taxed for Long Term Capital Gains as soon as you move to diversify if it is held in a straight investment account.
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You are taking on incredible, breath-taking, uncompensated risk. You got lucky.
Uncompensated? Really? He's up 7x his original investment in 10 years. That sounds like great compensation to me. If I were in his shoes my only regret would be not investing more, or else not investing the same amount another 10 years prior.
If you'd invested in the Dow at it's all time low this century, March 3, 2009, (6500 points), then the Dow would have to be well over 40,000 points to match his returns (now its around 25,000 to 26,000). So, not only has he been very well compensated for his risk, he's beaten the market!
We agree that he got lucky. I mean the textbook definition of uncompensated risk when it comes to investing.
https://en.m.wikipedia.org/wiki/Uncompensated_risk
“, if you owned only an individual stock or only a single market sector you would have significant uncompensated risk. By investing in one stock or one single market sector, you are not compensated for that extra risk (since that risk can be diversified away by owning the Total Stock Market). You should expect to get the same return as the market, but you have a lot more risk in your portfolio.
The efficient market hypothesis states that you are not rewarded for taking uncompensated risk.”
Investing in stocks versus bonds is taking more risk and therefore we expect (and with a broad index fund receive) higher return for that risk. With a single stock you are taking on magnitudes more risk without an average expected return that is greater than a broad stock market index. The standard deviation is much higher. You could get very lucky as this OP has been and you could also have your entire investment be wiped out, as has happened with examples already mentioned in this thread.
Thanks for the thoughtful reply and link. In the link you provided, uncompensated risk is defined as:
"Uncompensated risk is the level of additional risk for which no additional returns are generated and when taking systematic withdrawals make the probability of failure unacceptably high."
If we run the numbers, we see that AAPL beat the market and thus did provide additional returns. I don't believe that the systematic withdrawals clause applies either, but dunno, maybe it does. So as I see it, his investment example does not meet the threshold of compensated risk since additional returns were indeed generated.
Maybe the term is an academic one that by definition applies to any concentrated position. Dunno. But, it still seems like the OP has done very well for himself and now has a very high quality problem to solve.
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I would go online and order a used copy of CFA level III textbooks and look up “hedging a concentrated stock position” in the private wealth management section.
I’d then learn the very basics of options strategies.
I’d then learn the tax law regarding “constructive sale”. This is key to your hedging strategy.
Then i’d implement the above to remove tha vast majority of your single name risk in apple and swap the risk into index ETF’s without selling the AAPL stock and realizing taxes.
It should take you a weekend and is more complex than selling, but your deferred gain is large enough that you could save some real dough. AAPL is super liquid and has a robust options market, so this should be easy to implement.
Just think of yourself as an AAPL executive who can’t sell stock, but doesn’t want to own the downside risk and upside in only one company.this is a common occurrence and many strategies exist to take care of it. Goldman Sachs and the like will charge you an arm and a leg to implement t for you, but be mustachian and DIY.
Congratulations on your awesome investment.
This is great information. Thank you for your thoughtful reply. Even though I'm not the OP, I will do this.
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I would go online and order a used copy of CFA level III textbooks and look up “hedging a concentrated stock position” in the private wealth management section.
I’d then learn the very basics of options strategies.
I’d then learn the tax law regarding “constructive sale”. This is key to your hedging strategy.
Then i’d implement the above to remove tha vast majority of your single name risk in apple and swap the risk into index ETF’s without selling the AAPL stock and realizing taxes.
It should take you a weekend and is more complex than selling, but your deferred gain is large enough that you could save some real dough. AAPL is super liquid and has a robust options market, so this should be easy to implement.
Just think of yourself as an AAPL executive who can’t sell stock, but doesn’t want to own the downside risk and upside in only one company.this is a common occurrence and many strategies exist to take care of it. Goldman Sachs and the like will charge you an arm and a leg to implement t for you, but be mustachian and DIY.
Congratulations on your awesome investment.
I'm curious. I have a $100k position in which I am tax locked myself!
This strategy requires access to long duration options (sell using put/call pairs) or swaps. Are they really accessible for mom and pop investors?
For options, you only have LEAPs, which go out - maybe - up to 2-3 years, with decreasing liquidity the further you go out. So if you were to ride them you would be paying the decay in addition to the high bid/ask spreads.
Are there long term swaps (like AAPL vs SP500) available to the mom and pop investors?
I know institutional investors do this all the time. But they typically use OTC derivatives for this - not exchange traded ones, and they do it for significantly larger positions - not $600k ones.
I'd be curious to learn how to swap out of a relatively small concentrated position as a retail investor.
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@seeyalater, congrats on your healthy earnings, prosperous marriage, and risky but so far successful AAPL investment. Also on your VFORX investment, which appears to be a nice combination of tax savings from the IRA plus low-ish fees, disciplined management and long term planning.
Would you care to share your annual spending, to help set the context of how close to FIRE you are?
In the absence of spending info, I support that the risk of one stock is high and you should seek to sooner or later diversify instead, even if you keep the AAPL money in other stock investments. MrSpendy's proposal is designed to avoid capital gains tax while accomplishing the diversification goal. I don't know the details well enough to verify that they are foolproof, but it sounds like a good path to explore.
A different, perhaps slower technique for the same goal might be to focus new purchases into a stock index fund, such as VTSAX or VTWAX, and wait for downward movement in the fund. Whenever that happens, you could sell the fund and AAPL in a proportion such that the capital gains tax nets to zero. You can buy the new shares using the "specific identification method" so that each purchase is recorded separately at its own purchase price, maximizing the control you have over when to harvest losses vs gains.
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Nice. I almost pulled the trigger doing something like this when I had to roll over my 401k when switching jobs about 5 years ago and AAPL's P/E was something stupid like 3 or 4.....I ended being conservative, not doing it, and missing out on a LOT of gains...(and don't get me started on the calculated gamble i was going to take on NFLX which would have had me retired now...) but as far as what to do, since that is basically ALL of your savings, diversification would be a good thing. Index fund would be good, and the main index funds have a decent amount of AAPL anyway, so you'll still be 'in' AAPL. What you probably should do is switch all from AAPL into VTI/VTSAX, some vanguard total index fund....what I would probably do is keep 25-50ish in AAPL, and move the rest into an index fund.
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When I was a kid my father survived many rounds of layoffs at his big company. Other people obviously did not. One of those times his company went through bankruptcy and the stock price plummeted. There were people who were both out of a job and had their 401k decimated because they had all of their savings in company stock.
It is anecdotal but stories abound of why placing all your bets in any one basket is extraordinarily risky. Be clear: OP has been lucky so far but they provided zero guarantee of future performance. Plenty of people where live have long memories of when apple did not do great. I still see Yahoo! license plate holders around; I hope those people got out of company stock before it was too late. Unlike a stock index fund, an individual stock can plummet and never recover. It can go to zero. If it does you have no recourse. If you are okay with that then fine, but let’s be honest and call it what it is: gambling.
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If you run through a dynamite factory with a lit match, you might survive, but you're still an idiot. - Joel Greenblatt
LOL. Congrats though but yeah I would diversify some. You could use the dividends to buy other stuff as a start.
If you're going to FIRE you might have some low income/zero CG rate years in the future to sell some stock.
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Wow, was not expecting to login this morning and see this many replies. You guys (and gals) rock!
There was definitely some luck involved with this stock, but I did lots of research and have continued to follow AAPL very closely. I don't see Apple going the IBM way anytime soon. They're sitting on $300B cash and their services and wearables category are growing every day. I also think their content streaming services will do well with more and more people cutting off cable tv. The $2400 dividend is also nice to pull out every quarter, it's like a little bonus for myself.
I don't think I'm ready to sell all my positions as of yet, but possibly 50% and put into something (Vanguard) that some of you recommended. I was just not looking forward to paying the 15% tax on $300K when I sell. But I'm going to look into what Mr. Spendy and Ctuser1 mentioned and possibly find a way to avoid paying $45K in taxes.
@BicycleB: To be honest, we currently spend almost everything we take home. That's the reason I came to this forum, to get ideas on how to better manage our income/expenses.
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Woohoo, I'm up $29K today!
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Woohoo, I'm up $29K today!
You're still roughly flat (plus dividends) over the last year. SP500 has outperformed AAPL for that period.
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To be honest, we currently spend almost everything we take home. That's the reason I came to this forum, to get ideas on how to better manage our income/expenses.
ouch, that hurts.
OK, even before you do anything with your Apple stock, you need to look at the Investment Order - https://forum.mrmoneymustache.com/investor-alley/investment-order/ -and make arrangements for you and your wife to put the maximum you can into a low cost index fund in a 401k or equivalent. You will get an immediate return through the tax efficiencies, and in substantially reducing the cash you see in your bank account hopefully you will make commensurate reductions in all that wasteful spending.
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To be honest, we currently spend almost everything we take home. That's the reason I came to this forum, to get ideas on how to better manage our income/expenses.
ouch, that hurts.
Yup.
Being up $29k on the day is great, but what's the point if it's only frittered away later on meaningless junk? There's no end of stuff to waste your money on. Some people have managed to waste hundreds of millions of dollars in a single lifetime and die broke. One famous example is Jesse Livermore. He earned an inflation adjusted billion dollars (!) in the crash of '29 but still managed to die a pauper.
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Given today's surge, I'd probably take half and invest that in the way you normally would invest your retirement (looks like VOO). Many view half as a win-win; if it goes higher, you still have half in the market and if it goes lower, at least you took half profits.
The stock will turn down at some point in the future and when it does, if you haven't taken any profits, the unhappiness you'll feel will surpass any disappointment in not getting the absolute high (which almost never happens). You'll convince yourself that you'll sell when it hits "x" and if that doesn't happen, you're screwed because your mind will work mental gymnastics in such a way that you'll wish yourself to $0. Don't get greedy, especially not in a retirement account.
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@BicycleB: To be honest, we currently spend almost everything we take home. That's the reason I came to this forum, to get ideas on how to better manage our income/expenses.
Wow, that's huge. The spending/investing balance going forward is much more likely to control your future outcomes than the Apple decisions. I think you came to the right place!
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To be honest, we currently spend almost everything we take home. That's the reason I came to this forum, to get ideas on how to better manage our income/expenses.
@MrSpendy offered the most sophisticated answer (thanks!) but given the information above, there is a simpler but more incremental approach you can implement right now and without hiring a tax attorney.
1) Max out 401ks for you and your spouse. That shelters $19k each from taxes (higher if you are over 50). Invest in a diversified way. For 2019, you might have to set your deductions to near 100% of your paycheck to hit these maximums.
2) Sell enough Apple stock each year so that your capital gains are $38k and pay the 15% tax. Use this money for living expenses.
This approach shields $38k of pay from taxes while simultaneously triggering taxes on $38k of capital gains. The net is you would be paying taxes on the same amount of income as you would otherwise, but while redeploying capital toward a more appropriately diversified portfolio.
Of course, this approach would take a very long time to get you to a less risky portfolio. The specters of Nokia and Blackberry would haunt you in the meantime. While you explore @MrSpendy’s suggestions, consider one or both of the following strategies to cut your extreme levels of unsystemic risk:
-protective puts
-collars, including costless collars, using options 2-3 years out.
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Let's just all remember that Warren Buffet does not diversify, but he picks stocks after solid fundamental research to help reduce risk that he can control, then he invests heavily into them at great deals and holds for another lifetime.
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Let's just all remember that Warren Buffet does not diversify, but he picks stocks after solid fundamental research to help reduce risk that he can control, then he invests heavily into them at great deals and holds for another lifetime.
Investing is Warren Buffett's job. If you have his talent and are willing to invest the time (5-6 hours a day just for reading newspapers and corporate reports...) then by all means you can make that your job too. But for everyone else he recommends index funds (https://www.cnbc.com/2018/01/03/why-warren-buffett-says-index-funds-are-the-best-investment.html).
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Let's just all remember that Warren Buffet does not diversify, but he picks stocks after solid fundamental research to help reduce risk that he can control, then he invests heavily into them at great deals and holds for another lifetime.
Warren Buffet is diversified far beyond most individual stockpickers. Currently his fund (Berkshire Hathaway) is invested in roughly 50 companies across a wide swath of industries, and many of those are multinational congloberates that themselves bring in revenue from a diverse set of products and services. This is much, much, much different from having more than half your portfolio in a single company.
Yes, as RWD said his (and his sizable staffs') full time job is analyzing companies, but equally important is that he takes on a majority equity ownership for many of these companies, meaning he can has more favorable conditions than us 'normal' investors could ever hope to get buying and selling a few $k (or even a few $MM) at a time.
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Let's just all remember that Warren Buffet does not diversify, but he picks stocks after solid fundamental research to help reduce risk that he can control, then he invests heavily into them at great deals and holds for another lifetime.
Warren Buffet is diversified far beyond most individual stockpickers. Currently his fund (Berkshire Hathaway) is invested in roughly 50 companies across a wide swath of industries, and many of those are multinational congloberates that themselves bring in revenue from a diverse set of products and services. This is much, much, much different from having more than half your portfolio in a single company.
Yes, as RWD said his (and his sizable staffs') full time job is analyzing companies, but equally important is that he takes on a majority equity ownership for many of these companies, meaning he can has more favorable conditions than us 'normal' investors could ever hope to get buying and selling a few $k (or even a few $MM) at a time.
Even then Warren doesn't always get it right. See dexter shoes or buying into oil when it was over $100 a barrel.
Better still look what he wasted on Berkshire Hathaway.
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Warren Buffet invested some of Berkshire Hathaway’s money in AAPL, so probably individual investors should weight this one stock at least 82% of their portfolios.
Also, Adolf Hitler was critical of AAPL’s plans to innovate beyond their current product mix, and he was an immoral idiot, so AAPL is probably due to soar.
I just wanted to pull off both the Ad Warren Buffet and the Ad Hitlererium logical fallacies in one post. Mission Accomplished. Internet now even dumber.
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Congrats on this awesome pick 10 years ago. But honestly, I got to say, you have some steel balls having all your eggs in the same basket.
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I'd declare victory and sell a significant portion today. I do think Apple will continue to perform well for the foreseeable future, but the world is unpredictable. A bet of this size (relative to your assets) is crazy for any single investment.
If you do sell, consider taking a tax loss harvesting opportunity in your other investments if one comes along.
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Apple IS probably the best value pick that is as close to a "sure shot" as you can get in the stock market!! I myself have a huge position from when I used to pick individual stocks almost 9-10 years ago.
Even so, having almost your entire net worth concentrated in it not a good idea at all!! Ideally, no single stock should be more than 5% of your net-worth!!
I have worked with several people from the old Enron who lost their entire networth when that once "sure shot" went down!!
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Having all your eggs in one basket is risky. The least you can do is redirect your dividends to an index fund.
How much of this position is in long term gains? If it’s not a lot you can sell that portion and diversify. If it is a lot you can sell 300-400k and diversify. If I were you I’d be putting 100k in bonds, 100k in foreign index funds, and the rest in us stock index, keeping 100-200k in aapl if you like the company.
You can also sell enough aapl every year to fill up you current tax bracket.
I would definitely start maxing our you retirement plans in index funds.
I think Apple is one of the strongest company out there . They have over a billion active devices and very loyal customers. They seem to making a strong play into services, and with their large customer base that will do well. Also they dominate in wearables.
The biggest threat I see is they get broken up by regulators. That would be devastating. I wouldn’t want to be all in with Apple if that ever happens.
Sent from my iPhone using Tapatalk
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I would go online and order a used copy of CFA level III textbooks and look up “hedging a concentrated stock position” in the private wealth management section.
I’d then learn the very basics of options strategies.
I’d then learn the tax law regarding “constructive sale”. This is key to your hedging strategy.
Then i’d implement the above to remove tha vast majority of your single name risk in apple and swap the risk into index ETF’s without selling the AAPL stock and realizing taxes.
It should take you a weekend and is more complex than selling, but your deferred gain is large enough that you could save some real dough. AAPL is super liquid and has a robust options market, so this should be easy to implement.
Just think of yourself as an AAPL executive who can’t sell stock, but doesn’t want to own the downside risk and upside in only one company.this is a common occurrence and many strategies exist to take care of it. Goldman Sachs and the like will charge you an arm and a leg to implement t for you, but be mustachian and DIY.
Congratulations on your awesome investment.
Wow, this is a pro answer.
(https://i.imgur.com/9sDxES8.png?1)
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About 10 years ago I decided to put all my savings in AAPL and today it's worth about $600K which is freaking amazing. Leave it alone for another 10 years and hope it doubles?
You picked one of the best 10 year windows to invest in AAPL. You rode the iphone wave. There is nothing on the horizon for AAPL anything like the iphone. Wearables, app margins, and streaming don't have anywhere near the growth potential. The iPhone is their flagship product, conceived by their late founder. I don't think it'll happen again. They will probably do fine, but nowhere near the gains you have seen and nowhere near the gains of the winners of the next decade.
I would conduct research similar to the research you did to choose AAPL in the first place. I am a proponent of high conviction investing. I like Jack Dorsey and SQ, and they are attractively priced right now. I wouldn't invest in Bitcoin, but I am investing in SQ and part of the reason why is that they understand how devoted bitcoin believers are and they will help unlock the potential of bitcoin.
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Apple has gone down the toilet in the past and will again. I own some in the form of my total market Mutual funds and ETFs. Polaroid, GE, Enron, GM, Apple. It will happen. They're the trendy darling now, but in a generation, people will laugh to hear that people thought Apple was a future thinking company.
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About 10 years ago I decided to put all my savings in AAPL and today it's worth about $600K which is freaking amazing. I'm not sure how much longer I want to keep all my eggs in AAPL, but not sure what I should do. Take 50% of it out, pay the 15% tax on that and re-invest in something else? Sell it all? Leave it alone for another 10 years and hope it doubles?
At a price of $210 per share, you have about 2857 shares.
15% tax on 600k would be 90k. 15% tax on 300k would be 45k. How about setting a stop loss on half (1428 shares @ 178?) - That's 15% below current price, which you would owe the tax man if you sell here anyway. Personally I would not sell. It is ramping up for another run based on services and wearables and given its history, even if we have a downturn or a recession it will likely only sell off the same about or even less than the general market.
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So many good answers, but it's such a hard decision to even sell half my shares. If I didn't have to pay the 15% tax on profits, I would sell half in a heartbeat and put into something safer. It's also tough to sell when AAPL is doing so well and still has tons of potential.
I researched some of the ideas you guys suggested for not paying tax, but they seemed really complicated. I wonder if my broke (TD), can handle it, even if I had to pay them 5-7% I would still be way ahead.
Decisions....decisions....
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Sell a call option and buy a put option, around 10% out or more. There's some risk and you protect your current gains. Start unloading the position slowly.
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@BicycleB: To be honest, we currently spend almost everything we take home. That's the reason I came to this forum, to get ideas on how to better manage our income/expenses.
Glad you've come to MMM to figure out your income/expenses. Sorry to rain on the parade here, but, as others have suggested, you really need to spend some time extinguishing the out of control blaze that is your spending. Your family of 5 spends $170k a year? That's 100k more than we spend with the same number of people in the house. Congrats on the lucky stock pick, but yikes, that spending! You might try your luck at posting a case study if you want to do some real work reducing your expenses. It's a great place to start.
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So many good answers, but it's such a hard decision to even sell half my shares. If I didn't have to pay the 15% tax on profits, I would sell half in a heartbeat and put into something safer. It's also tough to sell when AAPL is doing so well and still has tons of potential.
This is easily done. Just wait until AAPL falls to the level of your purchase price. Then sell at that price. With no capital gains there will also be no tax to pay. Or, even better, sell below your purchase price so that you will have deductions that you can carry forward!
The capital gains tax isn't a new one, so presumably you knew about this when the investment was made. It shouldn't be a surprise now. Many people might be very envious of this high quality problem to solve.
Some people here have offered potential solutions to help mitigate the tax burden. Take the time to learn how to solve this problem. You will be handsomely rewarded for the time and effort.
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ETA: Striking earlier post in view of post below. Not sure if you should dig into learning options or not, but if you don't, I'd sell half the AAPL and accept the capital gains tax, use a slower tax efficient strategy to sell the rest, and focus on getting more joy out of less spending.
How much do you earn an hour?
How much would you save by learning to avoid tax while unloading your desired half of the AAPL stock?
Suppose it would take you 80 hours to learn the tax stuff and 20 to implement it. How much would you gain per hour by learning to use these options?
Example:
60/hour (120,000/year divided by 2000 hours)
(600,000/2)=300,000; 300,000 x 15% = $45,000.
80 hours + 20 hours = 100 hours.
Example answer:
$45,000 / 100 hours = $450/hour.
PS. The real key to your financial future is learning to tweak your spending. Your return on that will be less than $450/hour, but enough to completely change your life. It looks like the options-and-tax thing is one of the best per-hour steps you can take to achieve your financial goals.
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Sell a call option and buy a put option, around 10% out or more. There's some risk and you protect your current gains. Start unloading the position slowly.
You won’t save much on the 15% capital gains tax, of at all, trying this with the current LEAP options available from CBOT. Option premiums and time decay will make sure of that.
Most institutional investors use total return swaps for these types of tax avoidance schemes. I don’t know how a retail investor will access that. That stuff is only for ultra high net worth people ($30mm+) where an actual investment banker will work on it.
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Obvious solution:
Quit at the end of this year, reduce your spending, and sell enough stock in 2020 up to the 0% LTCG cut off. Repeat for the next 10 years.
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Sell a call option and buy a put option, around 10% out or more. There's some risk and you protect your current gains. Start unloading the position slowly.
You won’t save much on the 15% capital gains tax, of at all, trying this with the current LEAP options available from CBOT. Option premiums and time decay will make sure of that.
Most institutional investors use total return swaps for these types of tax avoidance schemes. I don’t know how a retail investor will access that. That stuff is only for ultra high net worth people ($30mm+) where an actual investment banker will work on it.
@ctuser1 if the OP sells a call and buys a put, time decay will increase their wealth as the call declines and decrease their wealth as the put declines. Depending upon exactly which calls and puts the OP trades, they could set up a time-neutral position where the decay of the call offsets the decay of the put. E.g if they sell $10k worth of calls that are worth $2k in a couple years, and buy $10k of puts that are worth $2k in a couple years, their initial outlay and their outcome would both be zero.
This feature makes the “collar” option strategy a very inexpensive way to protect gains or reduce portfolio volatility. Using LEAPS one can lock in protection for a couple years at a time.
That said, the OP might be forced to sell near the time of the options’ maturity if AAPL rallies beyond the short call’s strike price. In such a scenario, the OP could also trade both their options for higher strike prices, thus still avoid having to sell their stock.
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Sell a call option and buy a put option, around 10% out or more. There's some risk and you protect your current gains. Start unloading the position slowly.
You won’t save much on the 15% capital gains tax, of at all, trying this with the current LEAP options available from CBOT. Option premiums and time decay will make sure of that.
Most institutional investors use total return swaps for these types of tax avoidance schemes. I don’t know how a retail investor will access that. That stuff is only for ultra high net worth people ($30mm+) where an actual investment banker will work on it.
@ctuser1 if the OP sells a call and buys a put, time decay will increase their wealth as the call declines and decrease their wealth as the put declines. Depending upon exactly which calls and puts the OP trades, they could set up a time-neutral position where the decay of the call offsets the decay of the put. E.g if they sell $10k worth of calls that are worth $2k in a couple years, and buy $10k of puts that are worth $2k in a couple years, their initial outlay and their outcome would both be zero.
This feature makes the “collar” option strategy a very inexpensive way to protect gains or reduce portfolio volatility. Using LEAPS one can lock in protection for a couple years at a time.
That said, the OP might be forced to sell near the time of the options’ maturity if AAPL rallies beyond the short call’s strike price. In such a scenario, the OP could also trade both their options for higher strike prices, thus still avoid having to sell their stock.
That’s a nice strategy. Thanks.
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I have a very similar situation, I'm glad you started this thread. I invested 15k in Apple with an inheritance (at my dad's suggestion) back in the mid 90's. I've sold some along the way to put a down payment on a house, get through a couple tough spots, but I now have about $320k stock in a taxable account with a cost basis of $1.65. I'm in my mid thirties. I'm new to the whole investing FI thing, and when I set up my Vanguard account and had my free phone call I asked the financial advisor about it- he told me I would have to "rip the band-aid" at some point, but I've been wary to do that. We make about 150k per year and save half of it (it's my first year with a "real" job, I stayed home with kid for 2 years and then worked part time). I'm inclined to keep the Apple stock and throw all our new savings into index funds. We have about 80k in retirement funds and 250k equity in our house.
As a side note though I set up a Vanguard account in December and maxed it out, but instead of putting it in an index fund I put it in Apple on Dec 4th, which had dropped to 174. I sold it in July 30 for a 17.7% gain and put it VTSAX at this last little drop. If I had bought/sold VTSAX on those dates it would only have been an 11% gain....
Looking forward to reading the replies on this thread, it looks like a lot of good advice was given on how to diversify.
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mominca: Congratulations! That is amazing! Apple at a cost basis of $1.65 and it's now trading at $211 (or so). You get almost twice your cost basis annually in dividends. The power of the US stock market to generate wealth is like no other.
If you hadn't sold a share, it'd be worth $1.9m today. However, life is as it is and you still have to pay your bills no matter what. When emergencies arise, then it's nice to have alternatives. And, of course, there is no way to have known back then where the stock would be today--maybe it'd have been like Enron, GM or all the others that went belly up and you would've been very wise to cash out. All in all, it's a great story--part of your life!
Since it sounds like you're in good shape financially and don't need the money now or anytime soon, I'd encourage you to think long term. Very long term, in fact. You could set some of the stock aside for your child(ren) when they turn..... 30? 35? Not too young or else they may be too young to appreciate the value of money and squander it on poor decisions. Or maybe set up a trust (?) for your grandkids, for when they turn 30 or 35. It seems like ages away and it is. But you have the potential to secure the next generation(s) place in the middle class. Why not take it? YMMV.
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You are taking on incredible, breath-taking, uncompensated risk. You got lucky.
Uncompensated? Really? He's up 7x his original investment in 10 years. That sounds like great compensation to me. If I were in his shoes my only regret would be not investing more, or else not investing the same amount another 10 years prior.
If you'd invested in the Dow at it's all time low this century, March 3, 2009, (6500 points), then the Dow would have to be well over 40,000 points to match his returns (now its around 25,000 to 26,000). So, not only has he been very well compensated for his risk, he's beaten the market!
We agree that he got lucky. I mean the textbook definition of uncompensated risk when it comes to investing.
https://en.m.wikipedia.org/wiki/Uncompensated_risk
“, if you owned only an individual stock or only a single market sector you would have significant uncompensated risk. By investing in one stock or one single market sector, you are not compensated for that extra risk (since that risk can be diversified away by owning the Total Stock Market). You should expect to get the same return as the market, but you have a lot more risk in your portfolio.
The efficient market hypothesis states that you are not rewarded for taking uncompensated risk.”
Investing in stocks versus bonds is taking more risk and therefore we expect (and with a broad index fund receive) higher return for that risk. With a single stock you are taking on magnitudes more risk without an average expected return that is greater than a broad stock market index. The standard deviation is much higher. You could get very lucky as this OP has been and you could also have your entire investment be wiped out, as has happened with examples already mentioned in this thread.
Thanks for the thoughtful reply and link. In the link you provided, uncompensated risk is defined as:
"Uncompensated risk is the level of additional risk for which no additional returns are generated and when taking systematic withdrawals make the probability of failure unacceptably high."
If we run the numbers, we see that AAPL beat the market and thus did provide additional returns. I don't believe that the systematic withdrawals clause applies either, but dunno, maybe it does. So as I see it, his investment example does not meet the threshold of compensated risk since additional returns were indeed generated.
Maybe the term is an academic one that by definition applies to any concentrated position. Dunno. But, it still seems like the OP has done very well for himself and now has a very high quality problem to solve.
That's backwards though. You are defining the risk retroactively based on the outcome. AAPL was not projected to perform as well as it did, otherwise that would have been built right into the price from the start. Everyone buying individual stocks is assuming more risk than anyone just indexing. Some will perform better than the index, some will perform worse, but overall they will in aggregate perform the same as the market (by definition), but with higher volatility and risk. By buying an individual stock you are taking on more risk, but you are not receiving more compensation on average.
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Apple was started by a child-abandoning, cancer-incubating weirdo who had only 1 outfit. Forget what you heard on the TED talks; it's not okay to have just 1 outfit, and it's probably what gave him the sickness that killed him from the inside out.
Sell most of your Apple stock and pay your 15% gains taxes. If you think the market is going to tank, hang on to the remaining $500k because stuff's about to go on sale. If you want some interest on the money, put it into 1 year CDs at 2 different banks so you're insured against a banking collapse.
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You could set some of the stock aside for your child(ren) when they turn..... 30? 35? Not too young or else they may be too young to appreciate the value of money and squander it on poor decisions. Or maybe set up a trust (?) for your grandkids, for when they turn 30 or 35. It seems like ages away and it is. But you have the potential to secure the next generation(s) place in the middle class. Why not take it? YMMV.
That's a great idea! All the stock was in my Dad's name, so when it came time to transfer it he and my step mom had to "gift" it over a few years to my husband and I to avoid taxes. I could start transferring some into a trust to my kid (singular) each year. Having it in my dad's name definitely helped me restrain from selling more though... I had to answer to his longwinded response of how I shouldn't be selling it if I wanted to sell any portion. I did sell some in my early 20's to buy a $2000 dollar cyclocross bike, not a proud moment. My sister had the same investment and sold it at less than the original investment a few years after it was invested.
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Apple was started by a child-abandoning, cancer-incubating weirdo who had only 1 outfit. Forget what you heard on the TED talks; it's not okay to have just 1 outfit, and it's probably what gave him the sickness that killed him from the inside out.
Sorry, but no. A person's fashion sense does not cause pancreatic cancer.
Yes, Jobs was a very odd duck, and often not a very nice person, but many (most?) founders of large companies are not 'normal' people. Edison, Musk, Woz, Gates, Disney... all highly abnormal human beings
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Apple was started by a child-abandoning, cancer-incubating weirdo who had only 1 outfit. Forget what you heard on the TED talks; it's not okay to have just 1 outfit, and it's probably what gave him the sickness that killed him from the inside out.
Sorry, but no. A person's fashion sense does not cause pancreatic cancer.
Yes, Jobs was a very odd duck, and often not a very nice person, but many (most?) founders of large companies are not 'normal' people. Edison, Musk, Woz, Gates, Disney... all highly abnormal human beings
The sickness I refer to was not pancreatic cancer, which is terrible, and I wouldn't wish on anyone, including someone who would name a computer "Lisa," and then claim that Lisa was not his daughter, and take no responsibility for being her father.
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Apple was started by a child-abandoning, cancer-incubating weirdo who had only 1 outfit. Forget what you heard on the TED talks; it's not okay to have just 1 outfit, and it's probably what gave him the sickness that killed him from the inside out.
Sell most of your Apple stock and pay your 15% gains taxes. If you think the market is going to tank, hang on to the remaining $500k because stuff's about to go on sale. If you want some interest on the money, put it into 1 year CDs at 2 different banks so you're insured against a banking collapse.
What a very strange and hate-filled comment. He wore a uniform, he didn't have one outfit. There is a psychologically sound reason people do this and he wasn't unique in that.
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A better critique of Jobs is that while he was smart enough to found Apple, rescue Apple, and design the iPhone, he was also dumb enough to fall for the fabulous claims of the “alternative medicine” practitioners who ultimately killed him (pocketing who knows how much money).
Ask any modern psychologist- intelligence is very domain-specific. It was said Bill Clinton could shake the hands of a hundred strangers and remember all their names the next day. Yet his genius level social intelligence did not make up for a lack of self-discipline - which I would call another type of intelligence.
Perhaps any “genius” is a person whose talent has been concentrated in an extremely narrow scope of capability, and who is thus vulnerable to many weaknesses. Because the rise of geniuses will expose them to more opportunities to fail, it is inevitable that geniuses will regularly rise and fall.
This is also a metaphor about companies and their investors. Jobs should have outsourced his medical decision-making to cover his weakness for untested ideas. Clinton should have made his advisors impose discipline on him or perhaps hired a Stoic counselor/coach, to cover his weakness around self discipline. Individual investors should stick to indices to cover for their biases around information availability, selection and survivorship, or our expectations that the future will resemble the past. Expect individual companies to regularly fail when their weaknesses are tested.
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3-Month Update:
So that $600K of AAPL a few months ago is now worth $793K. I'm glad I just left it alone!
I did, however, put some new money into VTSAX and will be putting the AAPL dividends into it going forward.
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It is like watching someone rock climb without a harness or safety rope. Congrats on going higher but damn, I am so nervous for your risky situation!
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3-Month Update:
So that $600K of AAPL a few months ago is now worth $793K. I'm glad I just left it alone!
I did, however, put some new money into VTSAX and will be putting the AAPL dividends into it going forward.
Owning shares in a good company is not a bad idea. You did research and identified it as such. Awesome! Most here will point you towards index funds which is a mantra in the community. If you can justify continued growth with your research, have confidence in yourself. If you can't justify your investment with a forward look at the financials, perhaps consider changing your investment strategy.
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Do not confuse luck with skill.
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When I was 17 I inherited 20k from a deceased relative. My parents who were bankers and who I later found out have been in index funds for decades, let me do research and pick stocks after pitching it to them. I put 3500 into five companies and the balance in a municipal bond.
The five companies were :
Gateway
Dell
Yahoo
Amazon
Northpoint (where I got DSL from after the local telecoms not doing anything).
So am I an idiot? Or a genius? I’m up as of now on that investment, but only very recently and only due to Amazon, every single other stock purchase was awful. Furthermore the only reason I never ended up selling the Amazon stock was because it didn’t matter to me at all. Another site I wanted to invest in was IVillage, because I saw it ALL the time on AOL.
Apple wasn’t even on my radar, “the iPod sucks” I remember thinking later when I was looking for more “investments”.
My mom on some level hates the story because she expected me to lose money gradually compared to the market but nothing like what ended up happening where 3/5 ended up worthless and 1/5 went nowhere and stayed there and 1/5 went nowhere and then all of a sudden went to the moon.
If the money wasn’t “play” money on some level it would have ended in disaster long ago... much like apple owners who got out in 2000 or there abouts.
Over the last 10 years I’ve been selling 5% a year and moving the money into vtsax. I have been insanely lucky, and not due to nearly ANYTHING in my original proposal to my parents, “the best book store” and my safe stocks “the two best personal computing companies!”. I even proposed selling 25% a year (the account is still a joint account from when I got the money) and to avoid a tax hit we settled 5%.
I don’t consider myself a moron, but it is plainly obvious to me that anything other than some type of hedged position in a stock market is a fools game.
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3-Month Update:
So that $600K of AAPL a few months ago is now worth $793K. I'm glad I just left it alone!
I did, however, put some new money into VTSAX and will be putting the AAPL dividends into it going forward.
Why would you be happy about that? What you should have done was move it all to TSLA and it would be worth $912k now. You just missed out on $119k!
Seriously though, all of the good advice given in this thread is still good advice. Having a majority of your net worth in a single stock is insane. Just because you won the bet doesn't mean the odds were in your favor and it certainly doesn't mean they're in your favor moving forward.
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3-Month Update:
So that $600K of AAPL a few months ago is now worth $793K. I'm glad I just left it alone!
I did, however, put some new money into VTSAX and will be putting the AAPL dividends into it going forward.
Owning shares in a good company is not a bad idea. You did research and identified it as such. Awesome! Most here will point you towards index funds which is a mantra in the community. If you can justify continued growth with your research, have confidence in yourself. If you can't justify your investment with a forward look at the financials, perhaps consider changing your investment strategy.
^^ This
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All my eggs are in the refridgerator.
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All my eggs are in the refridgerator.
Silly Americans, if you didn't wash them you could keep them on the counter :)
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Good news OP, you can safely continue to ignore all the advice in this thread.
https://9to5mac.com/2019/11/20/aapl-stock-will-rise/
"Three factors mean AAPL stock will rise 11% in next 12 months"
Apple top is not in...
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Congratulations! You won the lottery.
That does not mean that the best strategy going forward is to continue to buy lottery tickets. But it doesn't really sound like you are open to advice. You are a gambler who just won big at the craps table, high on the adrenaline of success and a big pay out, unable to walk away.
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All my eggs are in the refridgerator.
Silly Americans, if you didn't wash them you could keep them on the counter :)
For optimal diversification keep some in the fridge and some on the counter
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All my eggs are in the refridgerator.
Silly Americans, if you didn't wash them you could keep them on the counter :)
For optimal diversification keep some in the fridge and some on the counter
And really you should consider the role of eggs in your overall GA (grocery allocation). Their short duration is best offset by something like dried beans, which can improve the sustainability of your food portfolio if you experience an extended Sequence of Grocery Runs event.
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I’ve put all my eggs into actual eggs. I’m banking on a bird-flu pandemic which will force US egg-layers to euthanize their flock, spiking the price. If it pans out I’ll be FI around Christmas. If not... lots of eggnog.
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
Godspeed
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
Pumpkin spice is back, wet bulb temperature (WBT) below 15, cranberry supply chain breaking down. Mashed potatoes to follow, weigh-in will be a reality check.
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
Pumpkin spice is back, wet bulb temperature (WBT) below 15, cranberry supply chain breaking down. Mashed potatoes to follow, weigh-in will be a reality check.
This thread has been infected, but it's not bird flu...
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
Pumpkin spice is back, wet bulb temperature (WBT) below 15, cranberry supply chain breaking down. Mashed potatoes to follow, weigh-in will be a reality check.
Guys, I just made a mint investing in buttcoin. Have you heard of blockchain?????? EVERYONE GETS RICH, EVERY TIME!
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
Pumpkin spice is back, wet bulb temperature (WBT) below 15, cranberry supply chain breaking down. Mashed potatoes to follow, weigh-in will be a reality check.
Guys, I just made a mint investing in buttcoin. Have you heard of blockchain?????? EVERYONE GETS RICH, EVERY TIME!
The “simpler” path to wealth:
https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20?mod=home-page (https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20?mod=home-page)
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
Pumpkin spice is back, wet bulb temperature (WBT) below 15, cranberry supply chain breaking down. Mashed potatoes to follow, weigh-in will be a reality check.
Guys, I just made a mint investing in buttcoin. Have you heard of blockchain?????? EVERYONE GETS RICH, EVERY TIME!
The “simpler” path to wealth:
https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20?mod=home-page (https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20?mod=home-page)
He'll lose it all.
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I've put my entire asset allocation into turkeys. It's been going up the whole month of November, and I've got a feeling they're going to peak right around January and BANG! That's when I'll cash in!
January? No. Sell now.
Flock is in.
Pumpkin spice is back, wet bulb temperature (WBT) below 15, cranberry supply chain breaking down. Mashed potatoes to follow, weigh-in will be a reality check.
Guys, I just made a mint investing in buttcoin. Have you heard of blockchain?????? EVERYONE GETS RICH, EVERY TIME!
The “simpler” path to wealth:
https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20?mod=home-page (https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20?mod=home-page)
He'll lose it all.
Aaaand it's gone.
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Could you just sell two shares each pay period and use those to fund a 401k contribution and basically trade w-2 income for long term capital gains?
You back out of the position slowly and become more tax efficient than you are presently. DH and I had a similar situation at one point it was probably about 35% of total net worth. It’s pared down to about 4% presently. I suspect that you will sleep better if you shrink your position.
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Amazing, OP! Congrats. Wondering if you have done anything to your AAPL shares. Are you going to wait and see the upcoming earnings report?
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From Nov 13th to now, AAPL is up another ~20% (Though the market as a whole is up A LOT as well, so the delta might not be that much) putting him around 950k.
Not too shabby for dumb luck!
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@TheAnonOne, $945K to be exact.
This is what I've done so far. I sold $100K in December and put it into VTSAX. I sold another $100K a couple of weeks ago and bought MSFT at $163.00. So I'll pay $15K of long term capital gains in my 2019 income taxes and another $15K for 2020.
I'll keep monitoring AAPL for now and sell some more if I see things changing, but I think both AAPL and MSFT will do well in 2020.
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What about using some put options to limit your downside?
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I'll keep monitoring AAPL for now and sell some more if I see things changing, but I think both AAPL and MSFT will do well in 2020.
Posting for posterity.
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I'm a millionaire!!
Today my portfolio hit $1M for the first time. Here are my positions:
77% AAPL
12% VTSAX
6% MSFT
I also bought some TSLA around $690 at the beginning of the COVID thing and sold around $800 a few weeks later. I should have bought some BA stock, but oh well.
Definitely not bad considering I was around $600K last August.
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Despite your screen name, you came back! :)
Joking aside, congrats.
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I would never encourage someone who was starting to invest to have more than 80% of their NW in individual stock positions.
But I think the $MSFT is really smart, as they're clearly a beneficiary of the virtual meeting culture that is suddenly so common.
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I’m anxious just thinking about it.
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I'm a millionaire!!
Today my portfolio hit $1M for the first time. Here are my positions:
77% AAPL
12% VTSAX
6% MSFT
Congrats on hitting $1M.
I worked with a guy who hit $1M in an individual tech stock before Y2K so like ~$1.5M in today's dollars. He was stoked and called his wife from Europe where he was on an assignment to tell her they were retiring when her got back. Stock crashed wiping him out and he is planning on retiring in 2022 after rebuilding his financial life and huge heartache. BTW - he'll be 70 when he retires. :-(
Being lucky is great, but being smart and lucky is better. FFS diversify some of that Apple stock even if you keep a significant chunk of it. The company my co-worker was invested in seemed rock solid until it suddenly wasn't.
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I'm a millionaire!!
Today my portfolio hit $1M for the first time. Here are my positions:
77% AAPL
12% VTSAX
6% MSFT
Definitely not bad considering I was around $600K last August.
AAPL went up +82% in 12 months (it was up +90% days ago). I don't get why Apple did the best among the top 5 tech companies (as a group, up +50% in 12 months).
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I'm a millionaire!!
Today my portfolio hit $1M for the first time. Here are my positions:
77% AAPL
12% VTSAX
6% MSFT
And AAPL has done about 15% better than the S&P since the peak of the market on 2/13/2020.
I would still aim to pull money out of AAPL in a tax efficient manner. Try splitting sales up into several tax years to reduce your tax bracket. You're taking on a lot of risk. And no bonds???? You are swinging for the fences.
https://finance.zacks.com/risk-single-stock-portfolio-5299.html
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Again, it's not that Apple is a bad company, so much as it is that the volatility associated with an individual stock position means you are bearing much more risk than is necessary to achieve your financial goals.
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Seeing that AAPL closed at $425/share yesterday (and announced a 4/1 split) reminded me of this thread.
OP, what did you eventually decide on doing?
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Turning out to be a damn fine basket
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Congrats to all the AAPL longs. It has clawed its way up to the #1 slot in our portfolio, and that is vs. some very strong companies as competition.
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Your first goal should be trying to diversify buy buying other stock. You can put away 50k plus a year in tax advantaged index funds. If you all make 170k a year and only have a $2.5k a month housing income, there is some serious fat. If that's your lifestyle choice, fine. But ten years from now if you don't have enough to retire, it isn't because of diversifying or not diversifying Apple, it is because you haven't been saving enough.
($850k net worth is still a great start for someone your age, but that doesn't mean you can't be doing better. )
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I sold about 700 shares in December, and purchased some VTSAX (boring) and MSFT (doing ok). I still have about 2300 shares or roughly $1M worth of shares. I'm up almost $150K since last Friday.
I am however strongly thinking of selling half my shares today. I'm just not sure what stock(s)/fund(s) I would put that $500K into.
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I sold about 700 shares in December, and purchased some VTSAX (boring) and MSFT (doing ok). I still have about 2300 shares or roughly $1M worth of shares. I'm up almost $150K since last Friday.
I am however strongly thinking of selling half my shares today. I'm just not sure what stock(s)/fund(s) I would put that $500K into.
Although I totally agree with diversifying, I am not sure now is a time to sell. I mean no one knows what will happen but realistically it should continue to drive up (probably not like Friday and today) for a bit longer since the split isn't til months end.
Of course you can look at as you've made a ton so get out now (pigs get fat, hogs get slaughtered) or you can look at as you've made a ton and even if it drops back to $400 were you really hurt? Also keep in mind there will be a big tax burden on that sale so you may want to diversify it over time and not just dump 50%.
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Better lucky than good, I guess.
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End of Year Update
Portfolio is now up to $1.45M. I plan on selling another $100K of AAPL in January and put it into VTSAX.
AAPL (80% of portfolio)
VTSAX
MSFT
NIO
I missed out on QS two weeks ago. I was about to buy in around $50, then it went up to $60 and I was waiting for it to go back down, but instead it went straight up to $120.00
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Congratulations! The wealth generating power of the US stock market for the average person is just amazing. I wonder how many thousands (hundreds of thousands?) of people AAPL has made into millionaires.
I recently found ARKG; it's an ETF that is looking into disruptive forward looking technologies to invest in. If you're looking for investing ideas, give it a look. The founder has also given a few interviews that can be found on youtube. YMMV.
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AAPL (80% of portfolio)
Congratulations on a winning gamble for now.
I'm not your significant other, but if I were him or her, I'd recommend you to diversify your assets immediately and get treatment for your gambling addiction. If not, this will end badly at some point. You know that. You can feel that yourself.
I'd say the "investor alley" section is not the appropriate place for this kind of post though. Apart from being a textbook example of how not to invest, it's got nothing to do with investing.
Your gambling has some semblance of investing, just enough for less financially literate people to get confused about the difference between investing and gambling.
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AAPL (80% of portfolio)
Congratulations on a winning gamble for now.
I'm not your significant other, but if I were him or her, I'd recommend you to diversify your assets immediately and get treatment for your gambling addiction. If not, this will end badly at some point. You know that. You can feel that yourself.
I'd say the "investor alley" section is not the appropriate place for this kind of post though. Apart from being a textbook example of how not to invest, it's got nothing to do with investing.
Your gambling has some semblance of investing, just enough for less financially literate people to get confused about the difference between investing and gambling.
A bit dramatic don't you think? Just because the OP doesn't invest like we would want doesn't mean he/she has a gambling addiction.
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AAPL (80% of portfolio)
Congratulations on a winning gamble for now.
I'm not your significant other, but if I were him or her, I'd recommend you to diversify your assets immediately and get treatment for your gambling addiction. If not, this will end badly at some point. You know that. You can feel that yourself.
I'd say the "investor alley" section is not the appropriate place for this kind of post though. Apart from being a textbook example of how not to invest, it's got nothing to do with investing.
Your gambling has some semblance of investing, just enough for less financially literate people to get confused about the difference between investing and gambling.
WRT the use of "gambling" in the above post:
"You keep using that word. I do not think it means what you think it means." Indigo Montoya
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So close to the end of the year, I cannot help but feel as though--were I in OPs position--I'd want to wait until next week to start exiting the position.
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AAPL (80% of portfolio)
Congratulations on a winning gamble for now.
I'm not your significant other, but if I were him or her, I'd recommend you to diversify your assets immediately and get treatment for your gambling addiction. If not, this will end badly at some point. You know that. You can feel that yourself.
I'd say the "investor alley" section is not the appropriate place for this kind of post though. Apart from being a textbook example of how not to invest, it's got nothing to do with investing.
Your gambling has some semblance of investing, just enough for less financially literate people to get confused about the difference between investing and gambling.
A bit dramatic don't you think? Just because the OP doesn't invest like we would want doesn't mean he/she has a gambling addiction.
I retract this unfortunate wording.
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The last few years have seen stock pickers and alternative asset gamblers outperforming buy-and-hold indexers. Piling into any of the FAANGM stocks was richly rewarded, but not nearly as much as piling into cryptocurrencies or Tesla. It seems like the riskier and trendier the asset allocation, the higher the rewards. Indexers have done well, but not nearly as well as the folks who ignored the sage advice. People are now talking about using leverage and performance chasing even on this relatively sophisticated forum. They become paper millionaires a year or two after getting a scolding from the indexers! Young investors can’t be blamed for wondering what’s the point of diversification if it has underperformed during their entire 5-10 year investing lifetime.
As an over-40 investor I’ll say there’s a very 1990’s feel right now. Narratives count for more than numbers. Valuations are sky-high, particularly for the darlings of tech which now dominate the indexes. People excuse their piling-in behavior by quoting each other’s sayings rather than pointing to any sort of discounted cash flow analysis or economic forecast. Tesla will dominate the car market. Bitcoin is digital gold. Amazon can’t be stopped. P/E’s don’t matter because growth. AOL can only grow as more and more people get internet service. Yahoo has a huge moat as a search provider. Etc. I’ve heard it all before in different ways.
I’m all in too. 2021 could be a banner bubble year like 1998 or 1999, but at some point I’ll switch to a cash-and-calls stance to protect my downside.
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The last few years have seen stock pickers and alternative asset gamblers outperforming buy-and-hold indexers. Piling into any of the FAANGM stocks was richly rewarded, but not nearly as much as piling into cryptocurrencies or Tesla. It seems like the riskier and trendier the asset allocation, the higher the rewards. Indexers have done well, but not nearly as well as the folks who ignored the sage advice. People are now talking about using leverage and performance chasing even on this relatively sophisticated forum. They become paper millionaires a year or two after getting a scolding from the indexers! Young investors can’t be blamed for wondering what’s the point of diversification if it has underperformed during their entire 5-10 year investing lifetime.
As an over-40 investor I’ll say there’s a very 1990’s feel right now. Narratives count for more than numbers. Valuations are sky-high, particularly for the darlings of tech which now dominate the indexes. People excuse their piling-in behavior by quoting each other’s sayings rather than pointing to any sort of discounted cash flow analysis or economic forecast. Tesla will dominate the car market. Bitcoin is digital gold. Amazon can’t be stopped. P/E’s don’t matter because growth. AOL can only grow as more and more people get internet service. Yahoo has a huge moat as a search provider. Etc. I’ve heard it all before in different ways.
I’m all in too. 2021 could be a banner bubble year like 1998 or 1999, but at some point I’ll switch to a cash-and-calls stance to protect my downside.
I agree with this. Feels very much like it did in the late 90's to me as well.
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I think once the vaccines are widely used people are going to start "living" like there's no tomorrow. enter roaring 20's (the redux!) rather than a 90's scenario. maybe even a lot of gin will be involved - that also has had a Renaissance.
Whoever knew that vacationing would be stamped out of existance for a year or two? People will be treating themselves, not saving, maybe taking on debt? YOLO! Who knows?
I think the stock market will do well during the resulting feasting frenzy. And lots may splurge on Teslas ;P , but of course inevitably it will pop. I'm thinking at least 2 years out from here, and I have to admit I am hard pressed to imagine a way to safeguard my stache. With super low interest rates, RE also gaining steadily during the pandemic, worries on deflation, etc. It does seem that investing in solid companies may be the best overall hedge.
Now - what's a solid company? I'd like to know!
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I think once the vaccines are widely used people are going to start "living" like there's no tomorrow. enter roaring 20's (the redux!) rather than a 90's scenario. maybe even a lot of gin will be involved - that also has had a Renaissance.
Whoever knew that vacationing would be stamped out of existance for a year or two? People will be treating themselves, not saving, maybe taking on debt? YOLO! Who knows?
I think the stock market will do well during the resulting feasting frenzy. And lots may splurge on Teslas ;P , but of course inevitably it will pop. I'm thinking at least 2 years out from here, and I have to admit I am hard pressed to imagine a way to safeguard my stache. With super low interest rates, RE also gaining steadily during the pandemic, worries on deflation, etc. It does seem that investing in solid companies may be the best overall hedge.
this is certainly possible. It's also possible that the shrinking of our labor force, the record number of long-term unemployed, the massive holes in state budgets and corresponding budget cuts for 2021 (state's can't print their own money, after all...), the trillions in stimulus, the thousands of businesses which won't survive until widespread vaccination allows for 'business-as-before', new lock-down measures, previously-unhit levels of deaths and infections, and other unexpected events might be an anchor on the economy in 2021 and 2022.
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I think once the vaccines are widely used people are going to start "living" like there's no tomorrow. enter roaring 20's (the redux!) rather than a 90's scenario. maybe even a lot of gin will be involved - that also has had a Renaissance.
Whoever knew that vacationing would be stamped out of existance for a year or two? People will be treating themselves, not saving, maybe taking on debt? YOLO! Who knows?
I think the stock market will do well during the resulting feasting frenzy. And lots may splurge on Teslas ;P , but of course inevitably it will pop. I'm thinking at least 2 years out from here, and I have to admit I am hard pressed to imagine a way to safeguard my stache. With super low interest rates, RE also gaining steadily during the pandemic, worries on deflation, etc. It does seem that investing in solid companies may be the best overall hedge.
this is certainly possible. It's also possible that the shrinking of our labor force, the record number of long-term unemployed, the massive holes in state budgets and corresponding budget cuts for 2021 (state's can't print their own money, after all...), the trillions in stimulus, the thousands of businesses which won't survive until widespread vaccination allows for 'business-as-before', new lock-down measures, previously-unhit levels of deaths and infections, and other unexpected events might be an anchor on the economy in 2021 and 2022.
After 2008, things didn't get back to 2007 levels for a few years. Unemployment peaked months after the end of the recession. Nothing like a forest fire to stimulate new growth.
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AAPL (80% of portfolio)
Congratulations on a winning gamble for now.
I'm not your significant other, but if I were him or her, I'd recommend you to diversify your assets immediately and get treatment for your gambling addiction. If not, this will end badly at some point. You know that. You can feel that yourself.
I'd say the "investor alley" section is not the appropriate place for this kind of post though. Apart from being a textbook example of how not to invest, it's got nothing to do with investing.
Your gambling has some semblance of investing, just enough for less financially literate people to get confused about the difference between investing and gambling.
A bit dramatic don't you think? Just because the OP doesn't invest like we would want doesn't mean he/she has a gambling addiction.
I retract this unfortunate wording.
I do think there is an incredibly interesting philosophical (if not practical) conversation here. The difference between having everything in AAPL versus everything in Tesla versus everything evenly split in 8 stocks (like average folk used to do to diversify) versus 100% VTI versus a 50/50 portfolio versus 100% money market versus a night of black jack with expected return of -0.5% per hand, versus a night of poker for a very good player, versus the money put into opening a restaurant, etc. In all of that there is complicated and interesting plays around expected return, risk mitigation, timeline, etc. The degree of risk and/or diversification one sees in a portfolio seems so all over the place (e.g. many feel "fully invested/diversified" in the market with VTI, while someone with VT laughs at them....)
I used to laugh at a casino with a buddy of mine that would be devasted with a $100 loss on the night because I knew he, like me, owned a business at the time that could make or lose many thousands every day, much of it out of our control (you try to float as little as you can and get your clients to pay on time, and you try to pick clients that will not file for bankruptcy or challenge your bills (to an extent that would dissolve your entire profit margin), and you hope you picked the right projects and charged the right amount, but in the end there was a lot of chance involved, thank god I got out before covid, I know my primary client clamped down on the wallet so who knows if , when, and how much I would have been paid of huge amounts outstanding).
My dad can't believe I have a 75/10/15 (stocks/bonds /cash) portfolio nearing RE and that I would be such the "gambler".
Sometimes investing in the entire stock market (so blindly investing in thousands of companies I know nothing about), I do feel like much more of a gambler than someone who is carefully selecting their companies to invest in (which does require one to greatly limit the diversification possible thru indexing). I do basically have the feeling that I'm like someone at a roulette table that generally has the 'odds' slightly in their favor, a positive expected return, but never quite sure, kinda like if a bet on black also paid out on the zeros, most of the time, but no one ever promised that was the rule ahead of time, I just know they usually have done it that way in the past so kinda expect/hope that continues...
Sorry, tangent.
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I think once the vaccines are widely used people are going to start "living" like there's no tomorrow. enter roaring 20's (the redux!) rather than a 90's scenario. maybe even a lot of gin will be involved - that also has had a Renaissance.
Whoever knew that vacationing would be stamped out of existance for a year or two? People will be treating themselves, not saving, maybe taking on debt? YOLO! Who knows?
I think the stock market will do well during the resulting feasting frenzy. And lots may splurge on Teslas ;P , but of course inevitably it will pop. I'm thinking at least 2 years out from here, and I have to admit I am hard pressed to imagine a way to safeguard my stache. With super low interest rates, RE also gaining steadily during the pandemic, worries on deflation, etc. It does seem that investing in solid companies may be the best overall hedge.
this is certainly possible. It's also possible that the shrinking of our labor force, the record number of long-term unemployed, the massive holes in state budgets and corresponding budget cuts for 2021 (state's can't print their own money, after all...), the trillions in stimulus, the thousands of businesses which won't survive until widespread vaccination allows for 'business-as-before', new lock-down measures, previously-unhit levels of deaths and infections, and other unexpected events might be an anchor on the economy in 2021 and 2022.
After 2008, things didn't get back to 2007 levels for a few years. Unemployment peaked months after the end of the recession. Nothing like a forest fire to stimulate new growth.
No disagreement there. I’m just pointing out that this assumption that there will be a massive explosion of spending following pent-up demand which will drive a huge boom may be too simplistic. A forest-fire stimulates new growth, but it destroys an awful lot first. The fire isn’t out yet, and by some readings (including my own) it’s going to get a lot bigger before it containment.
There’s a lot of reckoning once we reach a higher level of vaccination (which, incidentally, is going much slower than they projected even two weeks ago).
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28 Month Update
I've been selling AAPL and slowly putting it into VTSAX, but I can't sell too much in one year or I'll have to pay 20% tax instead of 15%. Pretty good considering 2 years ago my portfolio was at $600K. My goal is to funnel most of it into VTSAX and retire once the portfolio reaches $3M and just live off the returns.
Just for fun, I've also put $10K into OlympusDOA and Wonderland Time (crypto).
AAPL $1.2M
GBTC $15K (FOMO)
NIO $35K (I'm down $15K on this)
VBTLX $45K
VTIAX $45K
VTSAX $488K
Total $2M
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Good update, thanks for keeping us posted.
Best wishes on your continued sales (and the long shots on the side; great respect from me on the honesty).
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Yeah, thanks a bunch for posting an update! Sounds like you are progressing steadily!
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Thanks for the update, OP! I'm sad that you sold MSFT, one of my favorite companies!
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Well you know how it goes, things always go up after you sell.
I bought MSFT in Jan 2020 @ $163 and sold in Jan 2021 @ $224 and made about $18K. Had I held it until today, I would have made another $36K...
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I've been selling AAPL and slowly putting it into VTSAX, but I can't sell too much in one year or I'll have to pay 20% tax instead of 15%.
Are you considering the Net Investment Income Tax ("Obamacare tax") in those calculations? I think it kicks in at $200k single and $250k married filing jointly, and above that point you're paying an additional 3.8% tax.
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Conventional wisdom probably works here. Meaning you should probably diversify.
AAPL is a great company and their M chips will do quite well. But with their phones not really being much more advanced, the only thing keeping people in the iPhone ecosystem...is well, their ecosystem. They do have some long-term dangers if they fail to keep innovating on mobile or innovating in a new arena. Computer innovation gives good revenue -- but the market is much smaller than phones.
I'd just sell a large portion of it and shove it in S&P 500 and/or Nasdaq and/or DOW. And use the minority of your $ to do these YOLO/WallStreetBets plays.
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Fwiw I don't think you got lucky. I remember looking at apple a decade ago and they were dirt cheap and killing it. You went for it and got what you deserve. Congrats.
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Fwiw I don't think you got lucky. I remember looking at apple a decade ago and they were dirt cheap and killing it. You went for it and got what you deserve. Congrats.
I agree, the market was undervaluing AAPL as if they were about to go out of business. I also invested heavily in AAPL and did quite well. I've been selling over the last few years so it now makes up about ~20% of my liquid NW.
By the way, I made a backwards looking stock returns calculator and if you just invested $350 each month in AAPL since the first iPhone was released, you'd have invested about $63k but your investment would be about $1M (nearly 33% annual returns). (https://engaging-data.com/interest-stock-returns-calculator/?amt=350&date=2007-01-03&symbol=AAPL)