Author Topic: Need help with AAPL stock...  (Read 6103 times)

dragonwalker

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Need help with AAPL stock...
« on: February 14, 2017, 09:59:22 PM »
Ok so about 3 years ago I picked up about $50,000 in Apple stock with an adjusted cost basis now of about $88/share. I spent another $15,000 and picked up some more about 1.5 years ago at about $125. In total I have 736 shares. I had always planned on selling all or a large portion once the shares hit about $136/share brining the value to about $100,000.

However, I am having second thoughts about selling considering the recent trend on the stock and the relatively good news about earnings, the iPhone 8, and Warren Buffet going heavily in it. I remember the last time the shares peaked at $133ish I thought the same way and it took 2 years to recover...

At least I made dividend returns in the meantime. Right now despite telling myself I would sell everything if I had this next opportunity I seem to be paralyzed with the thought I might be missing some huge breakout in the stock.

If I sold at it's current valuation I would be seeing about 52% gain. I am leaning towards selling my initial cost basis of both purchases so $65,000 and leaving $35K in it. Not sure if anyone on here has any thoughts on this. 

Abe

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Re: Need help with AAPL stock...
« Reply #1 on: February 14, 2017, 10:06:09 PM »
Is there any specific reason you need money and are wanting to sell? If you are over-weighted in Apple, consider selling and diversifying with the gains. Otherwise if you think the company will continue to perform well in the long term, keep it and continue getting dividends. There's no reason to think they will drop in value any time soon.

lost_in_the_endless_aisle

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Re: Need help with AAPL stock...
« Reply #2 on: February 14, 2017, 10:47:29 PM »
Supposedly Apple is getting killed bigly in China by cheap competitors. It's a question of Apple's marketing to maintain their absurd rents on their products compared to the rest of the market, or (ha!) their ability to innovate new products. How's that Apple Car thing coming these days?

But idk, I'm pessimistic with any particular stock and and optimist overall.

AdrianC

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Re: Need help with AAPL stock...
« Reply #3 on: February 15, 2017, 04:34:25 AM »
If I sold at it's current valuation I would be seeing about 52% gain. I am leaning towards selling my initial cost basis of both purchases so $65,000 and leaving $35K in it. Not sure if anyone on here has any thoughts on this.

Stock-picking is hard. Buying is hard. Selling is harder.

I felt like a weight lifted off my shoulders when I sold most of my individual stocks and bought index funds.

MightyAl

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Re: Need help with AAPL stock...
« Reply #4 on: February 15, 2017, 05:00:01 AM »
If I sold at it's current valuation I would be seeing about 52% gain. I am leaning towards selling my initial cost basis of both purchases so $65,000 and leaving $35K in it. Not sure if anyone on here has any thoughts on this.

Stock-picking is hard. Buying is hard. Selling is harder.

I felt like a weight lifted off my shoulders when I sold most of my individual stocks and bought index funds.

Amen!

ChpBstrd

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Re: Need help with AAPL stock...
« Reply #5 on: February 15, 2017, 09:08:40 AM »
Unless you're worth about $5M, you made a mistake in the past by anti-diversifying and stock picking. Had AAPL gone down, this mistake would be apparent. But instead it went up, which caused you to wonder if it wasn't a mistake.

Not all mistakes turn out badly. Oftentimes, they turn out great, like the time I fat-fingered an options order and went long instead of short, only to realize my error when I was up 100% instead of down 50%!

But in the long run stock picking involves taking on both market risk (beta) and company-specific risk when you could have just taken on market risk and done about as well. This tends to hold true in the long run, although short-term wins tend to convince us we are master stock-pickers.

Remember Samsung's exploding phones? Remember Blackberry's sudden slide into obsolesence after going a couple years without a technological breakthrough? Remember Windows phones? These are illustrations of company-specific risks, and they all occurred in companies at a time when their market was growing rapidly. These events seem obvious in hindsight, but few predicted all 3. For every portfolio loaded with AAPL in 2002, there was someone else loaded with Nokia, afraid of selling and missing further spectacular gains.

There are 5 ways to win Russian roulette, and only one way to lose. Congratulations on winning, but put down the revolver. Switch to Vanguard's Nasdaq ETF and be grateful it didn't require an eventual five-figure loss to learn not to stock pick. Behavioral economics says ignoring this advice is your destiny, because you won big in the past.

If you still need help seeing AAPL as just another company, read Clayton Christenson's "The Innovator's Dilemma" and consider that AAPL operates in the inherently vulnerable high end of the market. Also, the markets for cell phones, laptops, etc. have reached near saturation in the developed world. They're not technology any more than microwave ovens.

AdrianC

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Re: Need help with AAPL stock...
« Reply #6 on: February 15, 2017, 09:23:26 AM »
Warren Buffet going heavily in it.

Just saw this:

http://www.dataroma.com/m/holdings.php?m=brk

% of portfolio
KHC - Kraft Heinz Co. 19.21 
WFC - Wells Fargo 17.86 
KO - Coca Cola Co. 11.21
IBM - International Bus. Machines 9.11
AXP - American Express 7.59
PSX - Phillips 66 4.71
AAPL - Apple Inc. 4.49 

Berkshire bought a ton of Apple, but it's still less than 5% of Berkshire's common stock portfolio.

MustacheAndaHalf

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Re: Need help with AAPL stock...
« Reply #7 on: February 15, 2017, 10:24:32 AM »
In the past 5 years AAPL is up +91%, which is great!  The S&P 500 is up +73%, with far less risk.  When you pick something besides Apple, you will still make gains.  It's just nobody knows what will happen in advance.

I want you to see something: search for "AAPL" and click into Google finance.  Then click on the left date and replace it with "2000-01-01" and the other date with "2001-01-01".  You should be looking at a -71% loss in one year.

Now fling the S&P 500 into the mix, which shows a -9% that year.  Which one do you prefer?

jjcamembert

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Re: Need help with AAPL stock...
« Reply #8 on: February 15, 2017, 12:08:07 PM »
Selling covered calls against your stock will reduce your risk and cost basis. Right now you could sell 7x March 140 calls and collect $0.92 per contract. That's $0.92 x 100 (100 shares per contract) x 7 = $644 collected.

In March, if the stock rallies past 140, you will sell your shares for 140 and you get to keep the premium collected. Basically you would be capping your upside gains (which you've already made) in return for some downside protection.

If AAPL goes down between now and March, your call contracts will reduce in price. In that case, you would buy back the calls and sell more in April. You probably couldn't pick the 140 strike again because it's too far out of the money, but you could sell calls at a lower strike, collecting more money, etc.

The covered call strategy is good if you're still slightly bullish on the stock and don't mind selling at the strike price (140 in this example). However, if you think the stock will drop, selling shares will outperform.

If it were me I wouldn't want more than 10% of my portfolio in AAPL. I'd sell more aggressive calls (135 strike) to sell some shares and use that capital to diversify.

CCCA

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Re: Need help with AAPL stock...
« Reply #9 on: March 29, 2017, 11:44:37 AM »
so did you sell? it's over $1000 in pre-split adjusted price and at an all-time high (~$144). 

Hargrove

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Re: Need help with AAPL stock...
« Reply #10 on: March 29, 2017, 08:04:28 PM »
There's no point in having a discussion if you set a predetermined exit point.

Exit at your predetermined point.

You decided to play a game. You played. You won. Now is not the time to change the rules until you lose.

Also, index funds.

Telecaster

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Re: Need help with AAPL stock...
« Reply #11 on: March 29, 2017, 08:07:12 PM »
If I sold at it's current valuation I would be seeing about 52% gain. I am leaning towards selling my initial cost basis of both purchases so $65,000 and leaving $35K in it. Not sure if anyone on here has any thoughts on this.

My thought is this: Is there a better use for the money? 

KBecks

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Re: Need help with AAPL stock...
« Reply #12 on: April 02, 2017, 06:22:32 AM »
Hi Dragonwalker,

What % of your portfolio is your Apple stock?  Is this your whole nest egg?

If you choose to keep some of the stock, personally, I would cut my exposure to a single company to maybe 5% - 10% of portfolio maximum.  But everything is your choice, and consider your overall situation.

iMO, Apple is a fine long-term investment.  I hold 5.4% of my self-managed portfolio in AAPL.   I know a lot of investors who whole a higher percentage in Apple, and it's up to you.  Consider your temperament and your timeline.  Can you hold these shares for another decade or two?  Do you have an emergency fund in cash for, emergencies?

If your investment is in a taxable account, be sure to remember your taxes if you sell some or all of your position. 

If you choose to diversify, you can take a chunk of your AAPL and put it into the S&P 500 or total market index. 

Generally, I want to hold good companies for decades.  I would hold onto some of them, but this is about YOU and the decisions that will give you the most pleasure and peace of mind.

Congrats on your investment, and best wishes with your decision.

BiotechGuy

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Re: Need help with AAPL stock...
« Reply #13 on: April 02, 2017, 01:33:17 PM »
AAPL is ripping up in anticipation of the new phone coming out this fall. Wrong time to sell IMHO. Probably shouldn't wait for the phone release, but I think it has room to run into the mid-150s before u should sell.

BiotechGuy

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Re: Need help with AAPL stock...
« Reply #14 on: April 02, 2017, 01:39:49 PM »
Warren Buffet going heavily in it.

Just saw this:

http://www.dataroma.com/m/holdings.php?m=brk

% of portfolio
KHC - Kraft Heinz Co. 19.21 
WFC - Wells Fargo 17.86 
KO - Coca Cola Co. 11.21
IBM - International Bus. Machines 9.11
AXP - American Express 7.59
PSX - Phillips 66 4.71
AAPL - Apple Inc. 4.49 

Berkshire bought a ton of Apple, but it's still less than 5% of Berkshire's common stock portfolio.


Keep in mind, it's not just Buffet, it's everyone in VTI and the like that probably own a few percent. AAPL is the top holding of VTI and currently represents 2.8% of your Vanguard total S&P fund.

mizzourah2006

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Re: Need help with AAPL stock...
« Reply #15 on: April 04, 2017, 09:36:14 AM »
Warren Buffet going heavily in it.

Just saw this:

http://www.dataroma.com/m/holdings.php?m=brk

% of portfolio
KHC - Kraft Heinz Co. 19.21 
WFC - Wells Fargo 17.86 
KO - Coca Cola Co. 11.21
IBM - International Bus. Machines 9.11
AXP - American Express 7.59
PSX - Phillips 66 4.71
AAPL - Apple Inc. 4.49 

Berkshire bought a ton of Apple, but it's still less than 5% of Berkshire's common stock portfolio.


Keep in mind, it's not just Buffet, it's everyone in VTI and the like that probably own a few percent. AAPL is the top holding of VTI and currently represents 2.8% of your Vanguard total S&P fund.

So as more and more money goes into market cap weighted index funds from active investors doesn't it make sense that as they create new 'shares' in these index funds and are forced to buy companies with astronomical market caps like Apple the stock will continue to go up in price? It's one of those things where Apple might hit a trillion in market cap just because it makes up such a large proportion of the S&P 500 in this time of unprecedented departure from active to passive investments. If that's the case why not go 100% exposure to the top 5 like OP did with Apple? Just brainstorming here, fwiw.

jjcamembert

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Re: Need help with AAPL stock...
« Reply #16 on: April 04, 2017, 02:48:30 PM »
So as more and more money goes into market cap weighted index funds from active investors doesn't it make sense that as they create new 'shares' in these index funds and are forced to buy companies with astronomical market caps like Apple the stock will continue to go up in price? It's one of those things where Apple might hit a trillion in market cap just because it makes up such a large proportion of the S&P 500 in this time of unprecedented departure from active to passive investments. If that's the case why not go 100% exposure to the top 5 like OP did with Apple? Just brainstorming here, fwiw.

I agree that's probably what's going on now. However new shares are not being created, someone has to sell you an existing share. The price goes up because buyers are willing to pay a higher price to own the shares. At some point everyone who wanted to buy has bought, the stock price is several more multiples of earnings, and now the stock isn't going up dramatically anymore. At that point, with AAPL being overweight and looking like less of a deal, maybe small caps become the next hot deal because their prices are better relative to large caps. Also just the nature of growth: for your investment to go up 10% at $100, it only needs to go up $10. If you buy at $200, it needs to go up $20, etc. At some point returns won't be worth the risk. Obviously there are many more factors that go into it as well (e.g. earnings, competition, interest rates, global economics).

You might be right that the top 5 stocks will keep outperforming, or maybe we've already hit equilibrium with the massive run-up this year. I'm in the latter camp: I reduced my GOOGL position because I had a nice profit and it had become something like 25% of my portfolio.

mizzourah2006

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Re: Need help with AAPL stock...
« Reply #17 on: April 04, 2017, 05:17:46 PM »
So as more and more money goes into market cap weighted index funds from active investors doesn't it make sense that as they create new 'shares' in these index funds and are forced to buy companies with astronomical market caps like Apple the stock will continue to go up in price? It's one of those things where Apple might hit a trillion in market cap just because it makes up such a large proportion of the S&P 500 in this time of unprecedented departure from active to passive investments. If that's the case why not go 100% exposure to the top 5 like OP did with Apple? Just brainstorming here, fwiw.

I agree that's probably what's going on now. However new shares are not being created, someone has to sell you an existing share. The price goes up because buyers are willing to pay a higher price to own the shares. At some point everyone who wanted to buy has bought, the stock price is several more multiples of earnings, and now the stock isn't going up dramatically anymore. At that point, with AAPL being overweight and looking like less of a deal, maybe small caps become the next hot deal because their prices are better relative to large caps. Also just the nature of growth: for your investment to go up 10% at $100, it only needs to go up $10. If you buy at $200, it needs to go up $20, etc. At some point returns won't be worth the risk. Obviously there are many more factors that go into it as well (e.g. earnings, competition, interest rates, global economics).

You might be right that the top 5 stocks will keep outperforming, or maybe we've already hit equilibrium with the massive run-up this year. I'm in the latter camp: I reduced my GOOGL position because I had a nice profit and it had become something like 25% of my portfolio.

I wasn't implying Apple is creating new shares, but certainly there comes a point in time as more funds flow into something like VTSMX more shares need to be created to accommodate the billions of dollars that flowed in last year as share prices aren't based on market demand like the underlying assets are, they are simply a reflection of the price of the underlying assets. In that instance they are forced to buy shares of companies proportional to the current % of the market they represent. It's kind of a rich get richer outcome. So while historically one would say it's less likely that a $500 billion dollar company will double than a 5 billion dollar company index investing may change that.
« Last Edit: April 04, 2017, 05:22:21 PM by mizzourah2006 »

ChpBstrd

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Re: Need help with AAPL stock...
« Reply #18 on: April 04, 2017, 08:35:57 PM »
If you feel companies outside the most popular indexes are a better value than companies in the indexes, you should take advantage of this arbitrage opportunity.

CCCA

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Re: Need help with AAPL stock...
« Reply #19 on: April 05, 2017, 11:29:28 AM »
So as more and more money goes into market cap weighted index funds from active investors doesn't it make sense that as they create new 'shares' in these index funds and are forced to buy companies with astronomical market caps like Apple the stock will continue to go up in price? It's one of those things where Apple might hit a trillion in market cap just because it makes up such a large proportion of the S&P 500 in this time of unprecedented departure from active to passive investments. If that's the case why not go 100% exposure to the top 5 like OP did with Apple? Just brainstorming here, fwiw.

I agree that's probably what's going on now. However new shares are not being created, someone has to sell you an existing share. The price goes up because buyers are willing to pay a higher price to own the shares. At some point everyone who wanted to buy has bought, the stock price is several more multiples of earnings, and now the stock isn't going up dramatically anymore. At that point, with AAPL being overweight and looking like less of a deal, maybe small caps become the next hot deal because their prices are better relative to large caps. Also just the nature of growth: for your investment to go up 10% at $100, it only needs to go up $10. If you buy at $200, it needs to go up $20, etc. At some point returns won't be worth the risk. Obviously there are many more factors that go into it as well (e.g. earnings, competition, interest rates, global economics).

You might be right that the top 5 stocks will keep outperforming, or maybe we've already hit equilibrium with the massive run-up this year. I'm in the latter camp: I reduced my GOOGL position because I had a nice profit and it had become something like 25% of my portfolio.

I wasn't implying Apple is creating new shares, but certainly there comes a point in time as more funds flow into something like VTSMX more shares need to be created to accommodate the billions of dollars that flowed in last year as share prices aren't based on market demand like the underlying assets are, they are simply a reflection of the price of the underlying assets. In that instance they are forced to buy shares of companies proportional to the current % of the market they represent. It's kind of a rich get richer outcome. So while historically one would say it's less likely that a $500 billion dollar company will double than a 5 billion dollar company index investing may change that.


this is an interesting point.  I assume the majority of money in index funds aren't really traded anywhere close to daily, and that retirement accounts are added to once or twice a month.  so maybe the amount of buying via index funds is a small amount relative to buying by daily traders or even buy and hold folks.

jjcamembert

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Re: Need help with AAPL stock...
« Reply #20 on: April 06, 2017, 03:23:19 PM »
I wasn't implying Apple is creating new shares, but certainly there comes a point in time as more funds flow into something like VTSMX more shares need to be created to accommodate the billions of dollars that flowed in last year as share prices aren't based on market demand like the underlying assets are, they are simply a reflection of the price of the underlying assets. In that instance they are forced to buy shares of companies proportional to the current % of the market they represent. It's kind of a rich get richer outcome. So while historically one would say it's less likely that a $500 billion dollar company will double than a 5 billion dollar company index investing may change that.

this is an interesting point.  I assume the majority of money in index funds aren't really traded anywhere close to daily, and that retirement accounts are added to once or twice a month.  so maybe the amount of buying via index funds is a small amount relative to buying by daily traders or even buy and hold folks.

I figured I'd grab some numbers to check out this idea. AAPL is 2.78% of VTI, so every time you buy VTI, that portion of your money buys AAPL. VTI trades about 2.3 million shares / day. So all of those transactions would be about 64,000 shares of AAPL traded from VTI per day. Those are transactions, so not all are buys, it's a mix of all buys and sells in the day.

AAPL's average daily volume is about 27 million. So the number of shares purchased through VTI transactions per day are less than 0.2% of all of AAPL's volume.

SPY is more heavily traded (76M shares/day), and AAPL is 3.7% of SPY. That's 2.8M shares of AAPL from SPY, but that's still only 10% of AAPL's volume.

Looking at Yahoo Finance, you can also see that Vanguard is the largest owner of AAPL and owns 6.43%. The top 10 holders combined own less than 25% of all AAPL stock.

I think that's a good thing: we still have an efficient marketplace with AAPL since there isn't a concentration of wealth in one place.

aspiringnomad

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Re: Need help with AAPL stock...
« Reply #21 on: April 06, 2017, 11:13:58 PM »
Just before this recent run-up, I sold half of my AAPL shares. That just about equaled my profit at the time, so I still have my original investment plus the ~20% recent run-up. I guess I prefer to be overweight buzzy tech stocks, because for some purely gut-based "reasoning" I added those profits to my GOOGL and TSLA holdings for about an even spread across the three. Anyway, this is now mostly for fun as individual stocks have cumulatively whittled down to less than 10% of my portfolio over time, as I've embraced the Mustachian indexing ethos. Unfortunately, one step in the direction of that ethos was selling all of my AMZN a few years back to add to an index...ah well...win some, lose some.