Author Topic: I have $31k in AAPL stock, am I an idiot?  (Read 40460 times)

vivophoenix

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #50 on: September 09, 2014, 02:12:42 PM »
so did all my spartan index funds....

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #51 on: December 01, 2014, 05:13:49 PM »
Still haven't sold.

I just can't do it.  I believe too strongly in the company.  So that means I know I've 'fallen in love with the stock' and Jim Cramer's advice of 'bears make money, bulls make money, pigs get slaughtered' puts me squarely in the pigs camp.

But I can't do it.

The thread title is wrong though, now it's $36,000 in AAPL stock.

Cecil

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #52 on: December 01, 2014, 08:11:34 PM »
If you didn't have this position, and you came into $36k in cash tomorrow, would you put it all into AAPL?

When deciding on an asset allocation, you should ignore your current positions and treat your entire portfolio as though it were cash (barring tax purposes).

Don't continue to hold stock just because you have held it in the past. Hold stock because you truly believe it's the best place for your money.

What you are doing is gambling, not investing.

sol

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #53 on: December 01, 2014, 09:52:19 PM »
36k is a relatively small amount by financial independence standards. I'd probably be okay with a one time ever gamble of that magnitude.

Except this isn't a one time gamble of $36k, because Apple's enormous market cap makes it a significant percentage of whatever index you're buying.  If you also have a million dollars in VTSAX and Apple goes to zero, you're out your $36k in stock plus another $30k off the top of your million dollars of index, since Apple is about 3% of the entire market right now. 

All of us who buy index funds are already overweighted on AAPL, so buying additional shares outright seems like foolhardy risk concentration to me.

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #54 on: December 02, 2014, 01:58:21 PM »
It IS foolish!  I know it!  I'm being ruled by emotion on this one.

We often ask the question of risk tolerance in terms of 'can you sleep at night'.  For me right now selling AAPL would cause me to sleep worse than not selling AAPL. 

I've held it through multiple 50% drops in value.  It doesn't even phase me, but the amount I sold a few years ago burns my brain because it would be worth so much more than what I did with it. (I took out my initial investment in AAPL which was just over $5k).

In a few years, my yearly dividends may start to pay out my entire initial investment every year.  Or it could go to zero.

I'm torn between head and heart here.  I KNOW what is smart.  Usually that means I do what is smart, but I just can't click sell on this one and it's my face-punch worthy weakness.

Other details:
IRA $73k in VTSAX. 
Roth IRA $12k in AAPL,
IRA#2 $24k in AAPL. 
401k $31k in 75% US low cost index fund and 25% in low cost international index fund
IRA#3 (wife's) $8k 50% VHT (vanguard health care index) and 50% VDE (vanguard energy index)

Total value of portfolio: just under $150k of which AAPL is at least 24% not counting the amounts in the index funds.

So bottom line, I put in money, got VERY LUCKY, already took out most of my initial investment, and now I feel like I should just 'let it ride with the houses money' but I know that is stupid.

Can I just sell a third of it?
« Last Edit: December 02, 2014, 02:12:04 PM by Allen »

rmendpara

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #55 on: December 02, 2014, 02:36:31 PM »
No reason to sell it all, and I completely understand how it feels to be playing with "house money" at this point since you've seen some seriously stupid returns since buying. You've probably felt like a genius at one point.

Personally, I don't know where I'd see the biggest return. Given you invested 10k originally, I'd sell at least 10k and reinvest elsewhere.

I know I'm giving away a bit of a secret (sarcasm), but no one ever lost money taking a profit.

The fact is that investing isn't about striking the lottery, but it is certainly about finding a strategy that will help you achieve positive returns over the long term. For example, I have included in my personal investment strategy, that I will sell at least 1/3 of a position if I see a 100% price gain. It hasn't happened yet, but I have exceeded 80% on several holdings (AAPL is among the handful of winners in this camp).

My reasoning is that I need to get paid, and if I never sell, then I never get paid.

Holding is not a rational investment decision, but you already admitted that. So... party?

Chuck

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #56 on: December 02, 2014, 03:41:15 PM »
I'm selling at 120. I promise. Really I will.

...

Or maybe I should hold it until the capital gains are long term... I don't even know. I just know it's very, very hard to let go of something that has gone up 15% in two months.

libertarian4321

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #57 on: December 02, 2014, 03:53:57 PM »
It's funny and purely emotional.  Since I'm already playing with "house money" so to say, if it dropped 50% I'd be OK with that and just keep holding it, but if I sold it and it went up 50% I'd be very upset because my gut says to hang onto it.  My brain says to take my winning and rebalance.

Gut vs head for me.

And yes, Apple is like 30% of my entire holdings, that is too much in one stock, right?  But the only reason it's 30% is because it's done so well.

If you had a million dollar+ portfolio, holding $31k in Apple would not be a big deal.

If it's 30% of your portfolio, you are playing with fire.  This ain't the first time Apple stock was "hot."  It has had spectacular rises, and equally spectacular crashes, a number of times in the past. 

If you fall in love with a stock (and it's easy to do when it's hot), you'll probably end up getting burned, because no stock stays hot forever.  I've made the same mistake in the past.  Apple is the rare company that has managed to survive multiple spectacular rises and falls, but it's highly unlikely that it will continue spectacular growth forever.  I can name exactly ZERO companies that have managed to do so decade after decade.

I'm not saying sell it all, but you might want to pare it back a bit.  Take those profits and diversify into some alternative stocks- preferably outside of the tech sector.


Rob

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #58 on: December 02, 2014, 08:21:30 PM »
I was on board with you holding earlier. Here are my thoughts.

I think AAPL is much closer to a fair valuation at this point. Still plenty of potential upside, but much more downside if numbers disappoint (I don't think they will). I think Q1 is going to be an amazing quarter for AAPL and should easily beat expectations, the problem is where do they go from there--and that's the question that will be on everyone's mind once the iPhone 6 tapers. Until investors know how good Apple Watch is, which won't be clear for a couple quarters, the legitimate fear of how difficult it will be to comp the 6 will probably keep the stock from soaring up to those $140-$150+ price targets.

I have owned Apple since 2006 and have added to my position many times and I am just now starting to get to a point where I am going to consider selling some. I am in a similar situation with about 31% in Apple. I don't think there is much downside before Q1 reports, so I will likely hold until slightly after that (plus getting the gains in the next year) unless I see another opportunity I want the money for. After Q1, if I sell, I don't anticipate selling more than half my shares. Since I am in exactly the same situation, I suppose that is my advice, although if you are less risk tolerant it would be a good idea to sell some. I don't think you can go wrong by selling 1/3 now.

Druid

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #59 on: December 02, 2014, 10:19:45 PM »
"I think you should also factor in the tax consequences of selling them.

If you are in the 15% tax bracket you should sell them

If you are in the 25 to 35% tax brackets your will have to pay $3000 in taxes on $20,000 gain.

If you are in the 39.6% bracket you will have to pay $4000 in taxes on your $20,000 gain.

I would start indexing from here on out and look for loss opportunities in your various index funds to offset the capital gains that you will incur while selling them. You will likely have to sell your apple stock in small batches to be tax efficient. On the other hand if you are risk adverse you may just want to sell them. The risk in your "portfolio" is immense."

Is what I would say if they were not in an IRA. I have poor reading comprehension and initially missed the IRA part. You should move the money to an index fund. I don't try to predict stocks, but 90% of unexperienced investors throw money blindly at Apple and that can't be good.
« Last Edit: December 02, 2014, 10:27:33 PM by Druid »

sol

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #60 on: December 02, 2014, 10:48:50 PM »
"I think you should also factor in the tax consequences of selling them.

If you are in the 15% tax bracket you should sell them

If you are in the 25 to 35% tax brackets your will have to pay $3000 in taxes on $20,000 gain.

If you are in the 39.6% bracket you will have to pay $4000 in taxes on your $20,000 gain.

Let's not forget that capital gains are taxed marginally, just like your income is, and you don't pay LTCG on the return of your principal.

If your income is currently below the limit of the 15% tax bracket, you can sell enough stock top out the bracket and still pay zero LTCG.  Any additional LTCG you incur between the top of the 15% bracket and the top of the top of the 25% bracket will be taxed at 15%.  So if you're MFJ and earn $50k/year, you could sell up to $23,800 in gains and pay zero taxes. 

Remember that the price you paid when you bought the stock isn't taxed, only the gain.  So if you bought $10k of stock that had over a 100% run up and is now now worth $23.8k, you would only be incurring LTCG on the $13.8k gain.  Which in the above example of $50k of income would not be taxed at all because you would still be well below the top of the 15% tax bracket.

josstache

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #61 on: December 03, 2014, 04:17:11 AM »
I agree with those asking if you had $36k cash right now, whether you would buy the stock at its current price.  http://en.wikipedia.org/wiki/Endowment_effect

For a different line of argument, as Kahneman himself would point out, the main reason to buy a stock, or hold one when transaction costs are zero, is if it is currently undervalued.  My personal view is that Apple is more likely to be overvalued than undervalued in part due to individual investors who own it for the wrong reasons (e.g., "I think Apple is a good company," or "I missed out on buying it 10 years ago but at least I own it now!")

rmendpara

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #62 on: December 03, 2014, 09:20:38 AM »
"I think you should also factor in the tax consequences of selling them.

If you are in the 15% tax bracket you should sell them

If you are in the 25 to 35% tax brackets your will have to pay $3000 in taxes on $20,000 gain.

If you are in the 39.6% bracket you will have to pay $4000 in taxes on your $20,000 gain.

Let's not forget that capital gains are taxed marginally, just like your income is, and you don't pay LTCG on the return of your principal.

If your income is currently below the limit of the 15% tax bracket, you can sell enough stock top out the bracket and still pay zero LTCG.  Any additional LTCG you incur between the top of the 15% bracket and the top of the top of the 25% bracket will be taxed at 15%.  So if you're MFJ and earn $50k/year, you could sell up to $23,800 in gains and pay zero taxes. 

Remember that the price you paid when you bought the stock isn't taxed, only the gain.  So if you bought $10k of stock that had over a 100% run up and is now now worth $23.8k, you would only be incurring LTCG on the $13.8k gain.  Which in the above example of $50k of income would not be taxed at all because you would still be well below the top of the 15% tax bracket.

Looks like all of his AAPL stock is within a IRA and a Roth.

Aggie1994

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #63 on: December 03, 2014, 09:57:39 AM »
I own 140 shares of AAPL (originally 20 shares thank you 7 for 1)

We have ridden out the waves with Apple for almost 2 years because we are in a taxable account and we believe in the company.

$150 is our sell point. (keep in mind we bought at $72 & 90 on our two different traunches) (which would be $1,050 fyi pre-split)

We also hold Facebook in that account and plan to hold it for at least a year. We sold SBUX at 75 on a stop limit because we saw it get up to $82 and then fall back down. Original cost was $42/share.

I would hold AAPL until after Christmas and reports come out because their Iphone 6 sales are targetted to be 71 Million.

This account for me is a "fun account" if you will and I have a very diversified 401k account.

ZiziPB

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #64 on: December 03, 2014, 10:40:27 AM »
I own 140 shares of AAPL (originally 20 shares thank you 7 for 1)

We have ridden out the waves with Apple for almost 2 years because we are in a taxable account and we believe in the company.

$150 is our sell point. (keep in mind we bought at $72 & 90 on our two different traunches) (which would be $1,050 fyi pre-split)

We also hold Facebook in that account and plan to hold it for at least a year. We sold SBUX at 75 on a stop limit because we saw it get up to $82 and then fall back down. Original cost was $42/share.

I would hold AAPL until after Christmas and reports come out because their Iphone 6 sales are targetted to be 71 Million.

This account for me is a "fun account" if you will and I have a very diversified 401k account.

I sold  ~$86K worth of AAPL stock a few months ago and bought Total Stock Market Mutual Fund instead.  Now I don't have to worry about the ups and downs of the Iphone sales, Ipad sales, Itunes lawsuits, etc...  It was definitely the right decision.
« Last Edit: December 03, 2014, 10:43:30 AM by ZiziPB »

Chuck

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #65 on: December 03, 2014, 12:18:24 PM »
I own 140 shares of AAPL (originally 20 shares thank you 7 for 1)

We have ridden out the waves with Apple for almost 2 years because we are in a taxable account and we believe in the company.

$150 is our sell point. (keep in mind we bought at $72 & 90 on our two different traunches) (which would be $1,050 fyi pre-split)

We also hold Facebook in that account and plan to hold it for at least a year. We sold SBUX at 75 on a stop limit because we saw it get up to $82 and then fall back down. Original cost was $42/share.

I would hold AAPL until after Christmas and reports come out because their Iphone 6 sales are targetted to be 71 Million.

This account for me is a "fun account" if you will and I have a very diversified 401k account.

I sold  ~$86K worth of AAPL stock a few months ago and bought Total Stock Market Mutual Fund instead.  Now I don't have to worry about the ups and downs of the Iphone sales, Ipad sales, Itunes lawsuits, etc...  It was definitely the right decision.
It was the responsible decision, but it was not the right decision- if making money is your goal.

APPL is up over 15% in the last 60 days. The broader market is not.

josstache

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #66 on: December 04, 2014, 04:13:24 AM »
Determining the right decision with the benefit of hindsight is not really fair.  If ZiziPB knew or should have known that Apple would outperform and sold Apple anyway, that would be the wrong decision. 

Otherwise the "right" decision is to go to a casino and bet on whatever number the roulette wheel is about to reward (but not before loading up on tickets with the winning Powerball number).

FIRE4Science

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #67 on: December 04, 2014, 06:12:54 AM »
@Dianne C

Index funds are full of stocks, and managed by a person who is gambling with their clients money and putting the risk on to the clients.

Why not take charge and make your own diversified portfolio? That why you determine the gains/losses, when to buy low or sell high; and if you can keep emotions out of it and observe the economics of all industries occasionally and passively, you can make money from a lot of individual stocks.

Anyone can also start up a "Fund" and get clients to invest in it for 0.50% fees/yr. Then show them historic numbers, so the clients build trust in your fund more and more and invest more and more. As the fund accounts grow toward $1Trillion, your 0.50% pays you nicely ($5 Billion per year), while all the risk is on your clients' money. This is the Art of Hedge Fund Management.

On top of it, the clients have proxyed their voting power for the stocks to your fund management. This entices CEO's of the 500 or so companies your fund invests in to bribe you with free meals, invitations to their mansions and companies, board positions, and so forth for you to not vote against their board policies. Number One Policy always showing up is the increase to CEO pay. If you have ever owned an individual stock (outside of a fund), you will get an invite to vote. This vote is always set to the "for" position to increase CEO pay, as well as many other things for the benefit of the board members acting on behalf of the company only on occasion. As a fund manager with a lot of shares giving power to you to vote, all you have to do is not vote "against" their wishes in return for all the rewards they bestow upon you. (as you continue to collect 0.50% on the dollar in your fund per year.) You have become a modern King of the realm.

matchewed

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #68 on: December 04, 2014, 07:59:38 AM »
@Dianne C

Index funds are full of stocks, and managed by a person who is gambling with their clients money and putting the risk on to the clients.

All investing has the risk on the person investing. When you invest in individual stocks you're the one taking on the risk. When you invest in index funds you're the one taking on the risk. What's your point?

Why not take charge and make your own diversified portfolio? That why you determine the gains/losses, when to buy low or sell high; and if you can keep emotions out of it and observe the economics of all industries occasionally and passively, you can make money from a lot of individual stocks.

Because apparently people with way more resources and time than you do what you're saying and fail against a market comparison with alarming regularity. You actually don't get to determine the gains or the losses oddly enough. You get to determine only what has happened in the past as an acceptable event, you're just reacting to events rather than making a solid plan for wealth growth. You can make a great deal of money from individual stocks, you can also lose a great deal of money from individual stocks, and much like I said in the beginning of this paragraph what makes you think that your resources in determining the "economics of all industries occasionally and passively" is going to be greater than someone with actual greater resources?

Anyone can also start up a "Fund" and get clients to invest in it for 0.50% fees/yr. Then show them historic numbers, so the clients build trust in your fund more and more and invest more and more. As the fund accounts grow toward $1Trillion, your 0.50% pays you nicely ($5 Billion per year), while all the risk is on your clients' money. This is the Art of Hedge Fund Management.

There is a distinct difference between a hedge fund and an index fund. Hedge funds are proven to be (primarily) a losing option. Index funds so far beat hedge funds most of the time. You're conflating two different things. There are more differences but I don't think I need to get into all of them. The point is you're trying to advocate individual stock ownership as a magic cure-all to the risks associated with hedge/index funds. But everything you've brought up is inherent in picking individual stocks. The risk that is mitigated by index investing vs. individual stock ownership is that you're more diversified with index fund investing than with individual stocks. If an individual stock fails it won't affect the index greatly (even Apple), but if a large percentage of your portfolio is Apple because you observed the economics of that industry and missed something on your analysis then you lose that large percentage. There is greater risk in losing a large percent of your portfolio when you focus on individual stocks.

On top of it, the clients have proxyed their voting power for the stocks to your fund management. This entices CEO's of the 500 or so companies your fund invests in to bribe you with free meals, invitations to their mansions and companies, board positions, and so forth for you to not vote against their board policies. Number One Policy always showing up is the increase to CEO pay. If you have ever owned an individual stock (outside of a fund), you will get an invite to vote. This vote is always set to the "for" position to increase CEO pay, as well as many other things for the benefit of the board members acting on behalf of the company only on occasion. As a fund manager with a lot of shares giving power to you to vote, all you have to do is not vote "against" their wishes in return for all the rewards they bestow upon you. (as you continue to collect 0.50% on the dollar in your fund per year.) You have become a modern King of the realm.

Actually if you're the owner of an individual stock it would make rational sense for you to vote on the increase of CEO pay as well, this is not something isolated to fund management. If things benefit the company, then the company increases shareholder value.

MooseOutFront

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #69 on: December 04, 2014, 08:07:02 AM »
@Dianne C

Index funds are full of stocks, and managed by a person who is gambling with their clients money and putting the risk on to the clients.

You're talking about actively managed mutual funds, but calling them index funds.  Big difference. 

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #70 on: December 04, 2014, 08:54:23 AM »
I appreciate all the advice on this thread.

I finally did it, although I feel nearly sick to my stomach. 

"it" is only selling 100 out of my 310 shares.  But I did it.

I believe I'll live to regret the decision, but if I use my brain, it was a rational, conservative move.  The funds freed up have gone to vanguard international etf's because I'm light international in my allocation.

Ugh.  Sometimes you just have to take some profits.  I'll be looking at trimming a second third sometime after the new year.  I will probably never sell the third third just because I love the stock the so much and love watching all the news and volatility.

Chuck

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #71 on: December 04, 2014, 08:56:20 AM »
Determining the right decision with the benefit of hindsight is not really fair.
Of course it isn't. The majority of the time, indexing the market will result in higher returns. The longer the period of time, the more true this is.

However, we DO have the benefit of hindsight in this case, and this particular example reveals indexings tradeoff: Successful growth stocks will often outperform the market index by large margins. The trick is successfully picking those stocks, which mostly comes down to luck and not science.

But when you pick a winner, you win big. APPL in this case is one such winner, and it doesn't appear to be losing steam any time soon. The iPhone 6 was way bigger than anyone thought it would be.

ZiziPB

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #72 on: December 04, 2014, 09:14:39 AM »
Determining the right decision with the benefit of hindsight is not really fair.
Of course it isn't. The majority of the time, indexing the market will result in higher returns. The longer the period of time, the more true this is.

However, we DO have the benefit of hindsight in this case, and this particular example reveals indexings tradeoff: Successful growth stocks will often outperform the market index by large margins. The trick is successfully picking those stocks, which mostly comes down to luck and not science.

But when you pick a winner, you win big. APPL in this case is one such winner, and it doesn't appear to be losing steam any time soon. The iPhone 6 was way bigger than anyone thought it would be.
I held the stock since 2000 and it went from ~$5K to $86K so I think I did OK with it ;-)  For me it was the right decision to sell and to invest in index funds in accordance with my AA.  Continuing to hold a large position in one company started to feel like gambling.  I have no regrets about selling and reinvesting the proceeds because it reduced the risk of my portfolio to a level that works for me.

matchewed

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #73 on: December 04, 2014, 09:18:47 AM »
I appreciate all the advice on this thread.

I finally did it, although I feel nearly sick to my stomach. 

"it" is only selling 100 out of my 310 shares.  But I did it.

I believe I'll live to regret the decision, but if I use my brain, it was a rational, conservative move.  The funds freed up have gone to vanguard international etf's because I'm light international in my allocation.

Ugh.  Sometimes you just have to take some profits.  I'll be looking at trimming a second third sometime after the new year.  I will probably never sell the third third just because I love the stock the so much and love watching all the news and volatility.

Bolded for emphasis.

Regrets are funny things. Usually not worthwhile to engage in unless there is some lesson to be learned. So learn whatever lesson can be taught and move on. Like other basic investing advice stick with diversification, low fees, and a high savings rate. This will protect you from most risks out there that your portfolio can encounter. It is entirely possible to pick an outlier strategy and hit it big. But stepping back and looking at the situation rationally may lead you to realize that this time the regret is just some weird attachment to money (or the accumulation of it).

It seems odd that I seem to be advocating that the accumulation of wealth is not the point of all this (I do advocate that). It is just a means to an end. That end is what you should be comparing your choices to. Does owning Apple stock aid towards that end? Does it have any possible risks which may harm that end? Any sort of regret that you may feel if Apple goes up another 10% is not necessarily a learning scenario as it is a human flaw in our brains weighing importance of money and the gaining of it being related to some "success". You'll be successful regardless of what Apple stock does or the indices you've selected as long as you focus on your goal and the actions that you control which can get you there. The rest of it is all learning about risks and mitigating them. IMO you mitigated a huge risk today by increasing your diversification in spite of your emotional attachment to Apple stock.

Franklin

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #74 on: December 04, 2014, 09:24:09 AM »
I appreciate all the advice on this thread.

I finally did it, although I feel nearly sick to my stomach. 

"it" is only selling 100 out of my 310 shares.  But I did it.

I believe I'll live to regret the decision, but if I use my brain, it was a rational, conservative move.  The funds freed up have gone to vanguard international etf's because I'm light international in my allocation.

Ugh.  Sometimes you just have to take some profits.  I'll be looking at trimming a second third sometime after the new year.  I will probably never sell the third third just because I love the stock the so much and love watching all the news and volatility.

Impressed on many levels.  You held onto part of a wonderful company, you took some winnings, you bought into a down sector.  Good job.

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #75 on: December 04, 2014, 09:43:24 AM »
Thanks again everyone.  Just making a note here that I sold for $116.62/share x 100 shares, so I can come and either be relieved or kick myself later :)

rmendpara

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #76 on: December 04, 2014, 10:07:47 AM »
I appreciate all the advice on this thread.

I finally did it, although I feel nearly sick to my stomach. 

"it" is only selling 100 out of my 310 shares.  But I did it.

I believe I'll live to regret the decision, but if I use my brain, it was a rational, conservative move.  The funds freed up have gone to vanguard international etf's because I'm light international in my allocation.

Ugh.  Sometimes you just have to take some profits.  I'll be looking at trimming a second third sometime after the new year.  I will probably never sell the third third just because I love the stock the so much and love watching all the news and volatility.

Do you expect the 20k-ish remaining position to be less than 10% of your portfolio within 5-10 years? I personally see no reason not to take concentrated and calculated risks.

In a portfolio, you don't necessarily have to be "perfectly" diversified at every single point in time. When I first started investing, I was about 50% in REITs, but that was also because my portfolio was barely 20k at the time. Now, it's less than 5%, and I didn't sell any of those. I'm actually looking to add.

ANyway, my point is that there's no rush to sell ALL of your stock, but just be sure that you see a more reasonable allocation within a few years.

Just be careful about falling in love with or irrationally hating a stock or company. It clouds your judgment.

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #77 on: December 04, 2014, 01:46:31 PM »
Unless it grows dramatically, I expect the remaining 200 shares to be worth less than 10% of my total portfolio in less than 2 years (adding about $41k/yr+ to investments)

ZiziPB

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #78 on: December 04, 2014, 02:12:21 PM »
If you had $23K in hand today (in addition to your other funds that you invest anyway), would you buy AAPL with it?

rubybeth

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #79 on: December 04, 2014, 02:32:47 PM »
If you had $23K in hand today (in addition to your other funds that you invest anyway), would you buy AAPL with it?

I feel like this is not the right question, because he didn't pay $116/share when he originally bought the stock, so he probably wouldn't buy it at that price, but if, say, right now you could buy the stock at $50/share and then turn around and sell it for $116/share, then yes, he probably would do the same thing again.

Full disclosure, I'm holding some AAPL that was a gift, and it's kind of my 'fun money' and I don't plan on selling it, but am also not banking on it being there when I retire, which is quite a way off anyway. Also, I'm getting some dividends from it.

ZiziPB

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #80 on: December 04, 2014, 02:37:24 PM »
I think that is absolutely the right question.  He can take the gains from it today (sell at 116).  So it only matters how the stock will perform in the future (116 is the starting point). 

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #81 on: December 04, 2014, 03:22:35 PM »
If you had $23K in hand today (in addition to your other funds that you invest anyway), would you buy AAPL with it?

I actually might.  It has been difficult not to continue buying AAPL even at these prices, not because I believe in future massive growth but instead continued massive profits and increased dividends and stock repurchases making a long term continued source of value.

ZiziPB

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #82 on: December 04, 2014, 03:31:26 PM »
If you had $23K in hand today (in addition to your other funds that you invest anyway), would you buy AAPL with it?

I actually might.  It has been difficult not to continue buying AAPL even at these prices, not because I believe in future massive growth but instead continued massive profits and increased dividends and stock repurchases making a long term continued source of value.
If that is the case, it sounds like you really believe that the stock will go up from today's levels and are willing to take the associated risk.  So I think you should hold on to it.  When I asked myself that question back in August, my answer was "definitely not", so I sold and invested the proceeds in accordance with my desired asset allocation.

Dicey

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #83 on: December 04, 2014, 09:30:20 PM »
@Dianne C

Index funds are full of stocks, and managed by a person who is gambling with their clients money and putting the risk on to the clients.

Why not take charge and make your own diversified portfolio? That why you determine the gains/losses, when to buy low or sell high; and if you can keep emotions out of it and observe the economics of all industries occasionally and passively, you can make money from a lot of individual stocks.

Anyone can also start up a "Fund" and get clients to invest in it for 0.50% fees/yr. Then show them historic numbers, so the clients build trust in your fund more and more and invest more and more. As the fund accounts grow toward $1Trillion, your 0.50% pays you nicely ($5 Billion per year), while all the risk is on your clients' money. This is the Art of Hedge Fund Management.

On top of it, the clients have proxyed their voting power for the stocks to your fund management. This entices CEO's of the 500 or so companies your fund invests in to bribe you with free meals, invitations to their mansions and companies, board positions, and so forth for you to not vote against their board policies. Number One Policy always showing up is the increase to CEO pay. If you have ever owned an individual stock (outside of a fund), you will get an invite to vote. This vote is always set to the "for" position to increase CEO pay, as well as many other things for the benefit of the board members acting on behalf of the company only on occasion. As a fund manager with a lot of shares giving power to you to vote, all you have to do is not vote "against" their wishes in return for all the rewards they bestow upon you. (as you continue to collect 0.50% on the dollar in your fund per year.) You have become a modern King of the realm.

FIRE4Science, Diane C here. Based on the way you wrote your comment, it is being quoted by others and looks as if it's something I said, which I do not believe it is. Are you responding to something I wrote earlier in this thread? If so, can you include a specific quote? I'd like to respond, but I don't know how/where to start. Thanks!

Rob

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #84 on: December 05, 2014, 07:32:27 PM »
I appreciate all the advice on this thread.

I finally did it, although I feel nearly sick to my stomach. 

"it" is only selling 100 out of my 310 shares.  But I did it.

I believe I'll live to regret the decision, but if I use my brain, it was a rational, conservative move.  The funds freed up have gone to vanguard international etf's because I'm light international in my allocation.

Ugh.  Sometimes you just have to take some profits.  I'll be looking at trimming a second third sometime after the new year.  I will probably never sell the third third just because I love the stock the so much and love watching all the news and volatility.

Congrats on your gains. I think you made a good decision and have a good plan going forward.

aspiringnomad

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #85 on: December 07, 2014, 10:02:50 AM »
I agree that you made a prudent decision to sell some of your shares, but I'm in similar shoes with my AAPL investment and have no plans to sell. Instead, I don't allow myself to accumulate more AAPL and direct all dividends and newly invested funds to diversified ETFs. Like you, I also believe in the direction the company is headed. I think it is continuing to build the best high-end ecosystem for consumers of tech and there's still plenty of room for growth and new revenue. If I'm wrong, the current product line will still continue as a cash cow for several years, while the current cash hoard buffers against missteps along the way. And even if the stock does go to zero while I'm still holding, it won't do so before returning significant equity to long-term shareholders: http://www.joshuakennon.com/eastman-kodak-example/
« Last Edit: December 07, 2014, 04:25:04 PM by dcmustachio »

Dicey

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #86 on: December 16, 2014, 12:23:41 PM »
I appreciate all the advice on this thread.

I finally did it, although I feel nearly sick to my stomach. 

"it" is only selling 100 out of my 310 shares.  But I did it.

I believe I'll live to regret the decision, but if I use my brain, it was a rational, conservative move.  The funds freed up have gone to vanguard international etf's because I'm light international in my allocation.

Ugh.  Sometimes you just have to take some profits.  I'll be looking at trimming a second third sometime after the new year.  I will probably never sell the third third just because I love the stock the so much and love watching all the news and volatility.
Hey Allen, I let myself get distracted by FIRE4science's fake quote (and lack of response)...

I'm sorry for that, as the real issue is your OP. Congratulations on taking such a big step. Another way to look at this is: how much of the Vanguard International ETF would you have been able to buy had you not sold the AAPL stock? Seems to me like the cold, hard facts show this step is a win, but you're stll feeling a sense of loss. Try reframing this so you see it as the victory is surely is. Apple is hot now, but it's always fun to look at the leading blue chips from past decades and see how many former giants are gone or merely shadows of their former superstar status. In time, I believe you will come to embrace how smart you are to use the AAPL stock to diversify your portfolio. Please do keep us posted.

CCCA

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #87 on: December 18, 2014, 04:47:37 PM »
I too have a higher than prudent allocation % in AAPL.  One problem is that the gains are also high (nearly $80k) so I want to sell it in chunks over time so as not to generate too much capital gains and thus taxes.  We are close to the 15%/25% marginal tax rate boundary and so selling too much stock and locking in the gains would also push us into the 25% rate which also carries a non-zero long-term capital gains rate.  So I am trying to reduce our exposure to AAPL given the recent run-up but at a rate that doesn't incur too much tax liability.  If I do it slowly, it may take several years or I might just bite the bullet at some point and pay the 15% tax.

Fallenour

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #88 on: December 18, 2014, 08:22:21 PM »
Drop it.

Apple is about to see a loss in their stock value.

They are currently in the middle of a slugfest lawsuit that even they themselves admit and recognize they will lose. The total amounts being pursued is in excess of 2 Billion USD. Even with a stock buyback, they wotn be able to make up those losses without depleting cash pools, which will be highly noticeable, and will decrease the value of their stock.

Id say decrease your apple stock, and pick up iron mountain and palto alto. They are the two highest steady gainers over the past 10 years, and show trends for continual increase for at least the next 3-5 years.

Allen

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #89 on: December 18, 2014, 09:35:51 PM »
Fallenour,

The stock may go up or down but I'm literally willing to bet $20k that the outcome of that lawsuit doesn't mean squat compared to the juggernaut. AAPL likes to take BIG dives on bad news but it doesn't matter the profits are just stunning for now. Can they keep coming up with hits? I believe they have more in them but maybe I'm wrong.

I still will sell $10k more at some point to further diversify into international. Maybe after the 1Q results. Or the apple watch release. Or ios9. Or who knows...

Fallenour

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #90 on: December 19, 2014, 06:44:47 AM »
Drop it.

Apple is about to see a loss in their stock value.

They are currently in the middle of a slugfest lawsuit that even they themselves admit and recognize they will lose. The total amounts being pursued is in excess of 2 Billion USD. Even with a stock buyback, they wotn be able to make up those losses without depleting cash pools, which will be highly noticeable, and will decrease the value of their stock.

Id say decrease your apple stock, and pick up iron mountain and palto alto. They are the two highest steady gainers over the past 10 years, and show trends for continual increase for at least the next 3-5 years.

Wow, excellent analysis.

The only problem is that all that information (which is highly visible well-known information and/or wrong) would already be built into the stock prices, and so won't affect future valuation.

Your comments are a bit like the person who says "I'm investing in Walmart before Christmas because people always buy a lot of stuff for the holidays!"

What you're failing to realize, is in all reality, its absolutely not.

In fact, its quite the opposite. People are mostly betting on three things, that very poorly judged concept of "its already configured in" which its not, and the fact that apple will win the lawsuit, which they wont, and the "kicking of the can" so to speak, as the legal battle has been waging between the two giants for over a decade now.

What will end up happening to apple is the same they did to samsung, their flagship phone, the Iphone 6, will most likely be banned from sales in the US due to massive copyright infringements on the Nexus 4.

When this occurs, outside of the 2.7 oddish Billion dollars in reparations, the iphone 6 will additionally be banned from sales in the US, and most likely have pursued bans in other countries, likeness for likeness, as they did to samsung. Its exactly why apple made the move to try and settle the murky waters with samsung recently, trying to "wave off" some 40ish lawsuits between the two, to make amends.

They did this specifically because the iphone 6 is their flagship, and a primary breadwinner for Apple. If it becomes banned, it will be a devastating blow to Apple, as compared to their ding they tossed at samsung, owned by the mammoth Google.

What many people fail to realize here, is Ive called the tech increases for Ionic security (doubled recently), Palo Alto, Cisco, EMC, RSA (and the buyout), Iron Mountain, check point, sourcefire, and Threatgrid.

I work in the industry, I follow the industry, and I have personal relationships with many of their major distributors, as well as the companies themselves. I know when they are doing well, and when they are not. So trust me when I say, Apple is absolutely going to see a % based drop in their stock value pending verdicts on both their case with Samsung, and their Class action against their Ipod.

Collectively the Ipod and Iphone make the majority of their sales. Dont try to feed me some half cocked "They are calculated losses" crap. Noone, regardless of who they are, can adjust their stock value for an unprecedented catastrophic loss like that. Nobody. Not even berkshire. You're gonna see points lost. Get ready for it.

aspiringnomad

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #91 on: December 19, 2014, 08:42:04 AM »
Drop it.

Apple is about to see a loss in their stock value.

They are currently in the middle of a slugfest lawsuit that even they themselves admit and recognize they will lose. The total amounts being pursued is in excess of 2 Billion USD. Even with a stock buyback, they wotn be able to make up those losses without depleting cash pools, which will be highly noticeable, and will decrease the value of their stock.

Id say decrease your apple stock, and pick up iron mountain and palto alto. They are the two highest steady gainers over the past 10 years, and show trends for continual increase for at least the next 3-5 years.

Wow, excellent analysis.

The only problem is that all that information (which is highly visible well-known information and/or wrong) would already be built into the stock prices, and so won't affect future valuation.

Your comments are a bit like the person who says "I'm investing in Walmart before Christmas because people always buy a lot of stuff for the holidays!"

What you're failing to realize, is in all reality, its absolutely not.

In fact, its quite the opposite. People are mostly betting on three things, that very poorly judged concept of "its already configured in" which its not, and the fact that apple will win the lawsuit, which they wont, and the "kicking of the can" so to speak, as the legal battle has been waging between the two giants for over a decade now.

What will end up happening to apple is the same they did to samsung, their flagship phone, the Iphone 6, will most likely be banned from sales in the US due to massive copyright infringements on the Nexus 4.

When this occurs, outside of the 2.7 oddish Billion dollars in reparations, the iphone 6 will additionally be banned from sales in the US, and most likely have pursued bans in other countries, likeness for likeness, as they did to samsung. Its exactly why apple made the move to try and settle the murky waters with samsung recently, trying to "wave off" some 40ish lawsuits between the two, to make amends.

They did this specifically because the iphone 6 is their flagship, and a primary breadwinner for Apple. If it becomes banned, it will be a devastating blow to Apple, as compared to their ding they tossed at samsung, owned by the mammoth Google.

What many people fail to realize here, is Ive called the tech increases for Ionic security (doubled recently), Palo Alto, Cisco, EMC, RSA (and the buyout), Iron Mountain, check point, sourcefire, and Threatgrid.

I work in the industry, I follow the industry, and I have personal relationships with many of their major distributors, as well as the companies themselves. I know when they are doing well, and when they are not. So trust me when I say, Apple is absolutely going to see a % based drop in their stock value pending verdicts on both their case with Samsung, and their Class action against their Ipod.

Collectively the Ipod and Iphone make the majority of their sales. Dont try to feed me some half cocked "They are calculated losses" crap. Noone, regardless of who they are, can adjust their stock value for an unprecedented catastrophic loss like that. Nobody. Not even berkshire. You're gonna see points lost. Get ready for it.

Apple was just cleared in the class action iPod suit. No damages awarded to the plaintiffs, no skin off Apple's back. As far as I can tell in the ongoing Samsung v. Apple patent wars, Apple is the one that stands to win a verdict in their favor to the tune of $930m.

Also, you do know the iPod now generates just 1% of Apple's revenues, so while your statement that it along with the iPhone make up the majority of Apple sales is technically correct, it's only because the iPhone is such a cash cow for the company. I agree that if Apple were forced to stop selling the iPhone it would have a devastating effect on share price, but there's absolutely no indication beyond your soothsaying that it will happen.

Chuck

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #92 on: December 19, 2014, 05:49:54 PM »
Fallenour, I can't imagine a universe in which any of that prediction comes true. Certainly not THIS universe.


sol

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #93 on: December 19, 2014, 07:07:06 PM »
trust me when I say, Apple is absolutely going to see a % based drop in their stock value pending verdicts on both their case with Samsung, and their Class action against their Ipod.

Collectively the Ipod and Iphone make the majority of their sales. Dont try to feed me some half cocked "They are calculated losses" crap. Noone, regardless of who they are, can adjust their stock value for an unprecedented catastrophic loss like that. Nobody. Not even berkshire. You're gonna see points lost. Get ready for it.

So how much of your personal fortune is personally tied up in Apple shorts right now?

Like are you 90% sure of your prediction so 90% of your net worth is tied to shorting Apple?  Are you only 10% sure and 10% tied to shorting Apple?

Are you not shorting Apple at all?

CCCA

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #94 on: December 19, 2014, 07:41:20 PM »

Fallenour, I can't imagine a universe in which any of that prediction comes true. Certainly not THIS universe.

That's what I was thinking. I'm not in the industry but do follow most AAPL news and fallenours "analysis" seems somewhat suspect.

josstache

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #95 on: December 19, 2014, 09:36:45 PM »
While one remedy for patent infringement is a ban on the sale of the infringing products, Apple should currently be trading at a discount based on the market consensus on the probability and impact of any such ban.  It follows that Apple is overvalued from the perspective of someone with the material, non-public (i.e. "insider") information that the iPhone 6 and 6 Plus are about to be banned in the US. Depending on how a person came to such information, and their motivations for posting it on a public message board, they could be prosecuted for violating federal securities law.

Fortunately or unfortunately, I don't think we have received any material, non-public information here.

sol

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #96 on: December 19, 2014, 10:05:25 PM »
Fortunately or unfortunately, I don't think we have received any material, non-public information here.

Was that a slightly more diplomatic way of saying he's blowing smoke out of his ass?

iamlindoro

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #97 on: December 19, 2014, 11:18:13 PM »
Fortunately or unfortunately, I don't think we have received any material, non-public information here.

Was that a slightly more diplomatic way of saying he's blowing smoke out of his ass?

Impossible.  He's our resident Tech stock investment guru.  He started a thread that said so.  You guys are gonna feel pretty silly that you didn't short apple and go long Russian Rubles in a few months...

LordSquidworth

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #98 on: December 22, 2014, 08:58:19 PM »
While one remedy for patent infringement is a ban on the sale of the infringing products, Apple should currently be trading at a discount based on the market consensus on the probability and impact of any such ban.  It follows that Apple is overvalued from the perspective of someone with the material, non-public (i.e. "insider") information that the iPhone 6 and 6 Plus are about to be banned in the US. Depending on how a person came to such information, and their motivations for posting it on a public message board, they could be prosecuted for violating federal securities law.

Fortunately or unfortunately, I don't think we have received any material, non-public information here.

Appl is/has been trading at a discount compared to many of it's competitors and other tech companies.

When someone resorts to "I work in the industry/I know the people in the industry" it's often best to look the other way.

LuckyMe

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Re: I have $31k in AAPL stock, am I an idiot?
« Reply #99 on: December 23, 2014, 08:00:35 AM »
I'm in a similar position with Apple stock I bought 5 years ago that has now increased over 5x in value.  This was back before I started indexing.  However I can't sell because it would incur a big capital gains tax.  If you have shares or Apple or another stock in a tax-advantaged account, you're in an enviable position.