Anyone who pays any attention to technology news or the stock market heard about Apple’s spectacular stock collapse this past week. Analysts’ expectations were high and Apple didn’t meet them, so the stock was severely beaten. In my mind’s eye, I’m picturing Mike Tyson at a Whac-A-Mole game. Instead of moles, Tyson is smacking little Apples into oblivion. Applesauce.
Now, take a look at my ‘Status’ on the right side of this blog that I use to keep track of my returns for the year. Despite a market which is off to a fantastic start in 2013, my portfolio is in negative territory. You don’t have to be a genius to see where I’m going with this.
Way back when the iPhone was announced, I bought Apple stock. In my iFrenzy, I continued to load up on Apple. I ended up with about 350 shares. Do the math; Apple makes up about 25% of my portfolio. Danger Will Robinson! Danger!!
In the back of my head, I always knew that it was too much. This recent price drop proved it; I received a swift and painful kick to the apples. The day after earnings were announced, Apple lost $63 dragging down my portfolio by $22,500. However, if you consider that Apple was $700 back in the fall, this one investment has dragged me down by almost $90,000 in the time period of about 3 months. I’m not even accounting for my 401(k)’s mutual funds, many of which list Apple as a top 5 holding. Holy Bad Apples, Batman!!!!
I have no hope either for the near term. Apple has so much negative sentiment holding it down, I wouldn’t be surprised if it dropped another 100 points before stabilizing. Depressing.
This is a prime example of why you should not own individual shares of stocks or at least try to be heavily diversified. Don’t tie up (lose) your money trying to chase a popular stock:
- I say it over and over, but here I go again; most highly paid, highly educated folks can’t beat the market. Why do you think you can? Buy an index fund and be happy.
- Ever heard of efficient-market hypothesis? It basically states that you can’t beat the market because all public information is already accounted for in the price of a stock.
So, what am I going to do with Apple? I didn’t react and sell it like a whole bunch of other folks did. Seems to me that the company is still very strong; it’s just that its days of crazy growth are over and analysts have to adjust their expectations. However, by the end of this 1500 day experiment, I plan to be rid of all shares. I’ll sell them when I have something else to do with the money; probably a rental property later this year or in 2014.
I see a lot of 20ish people making the same mistakes. While they are smart for thinking about retirement at a young age, they think they are somehow smarter than everyone else and end up losing quite a bit of money that could have been invested better.
As depressing as this is, my $90,000 Apple stock loss is a paper loss. I wasn’t ready to sell it and still am not. I had just started thinking about Apple being too much of my portfolio.
I am reevaluating my entire portfolio. I am slowly leaving the individual growth stocks, and concentrating on income-generating investments (P2P lending and rental property), as though I were in my 50s or 60s and getting ready for retirement because that is exactly what I am doing. That is unless Apple goes down to $100 in which case this blog’s web address will change to 2100days.com.
Vanguard is fairly new to Canada and I am trying to decide which fund to put my meagre pennies in.
P2P lending is unproven in Canada and I have been trying to find a reliable provider of the service. My risk tolerance is very, very, very extra low.
I hold some individual shares but I am focused on banks and dividend paying shares and holding for the long run.
I really have no idea what I am doing because I am focused on the yoke of debt that I drag around. When I am debt free then I can think about investing.
I do wish I had been in on this fat freezing technology. Everyone I know is having their lumpy bits zapped with extreme cold. Plus, if I was an investor I might get a discount.
Its great that you’re aware of your situation and putting thought into it. That alone puts you ahead of many others and it probably the most important step.
That’s a tough one mate. I’ve got about $40,000 in Apple stock righ now in the form of structured notes. If it doesn’t breach $408 by June 17th, I’m in the money up 3.5%. If not, I’m down 20%+.
Check out this post, it might intrigue you: http://www.financialsamurai.com/2013/01/25/example-of-how-a-structured-note-works/
Thank for the information on structured notes! I read through the post, but need to read it again to make sure I fully comprehend. I know only the very basics about derivatives (calls and puts), so I appreciate the information.
Apple scares me a bit more every day. I thought that their big upside for 2013 would be a cheaper iPhone paired with a deal to get on China Mobile, giving Apple direct access to their 700,000,000 subscribers. Now, it seems that the Chinese government (which controls China Mobile) has Apple in it’s cross-hairs. This is probably in retaliation for recent criticism (justified in my opinion) of Huawei coming from the US government. Good article here: http://www.cultofmac.com/221696/why-apples-china-disaster-is-worse-than-you-think/
I can’t imagine Apple going lower than $400 this year unless they really screw up further. That’ll be 9.5X lowered earnings already, and if so, I’m buying the crap out of it.
Nice to hear confidence from someone who knows their stuff. Most of the mainstream writings on Apple are garbage. The stock has taken way too much of a beating. I think bad expectations are already priced into the April report, so I don’t think it can go much lower in the near future.
This article rung oh so very true for me…and brought back some painful memories.
I just posted something that very much echoes your experience.
So much for not breaching $400…
No Waste recently posted…Why I’m A Boglehead (Part II)
I was there at one point, too.
I took me losing half my net worth to realize I wasn’t an investing wiz. Individual stocks weren’t going to make me rich, they were going to make me poor. Well, it’s not the fault of the stock. It’s mine! There’s people out there that can do it, but certainly, most can’t.
I’ve stuck to index funds since, more or less.
Chris@TTL recently posted…Index Funds vs Stocks: Which is better?
Nothing wrong with that at all!
Hey 1500!
Wondering if you ended up selling your AAPL. By my calculations, the stock split 7-for-1 less than a year after you wrote this and much more recently it split 4-for-1 and if I did my math right your 35o shares would be worth about $1.3 million right now.
You might have invested proceeds in real estate and with leverage you could have done much better, but as a stock guy this caught my attention. Of course hindsight is 20/20.
Just found your stuff and love reading it so far. Cheers!
Brian Soule recently posted…Sand In My Shoes – December Update
I did end up selling to invest in real estate (trailer park). And yeah, BIG MISTAKE! Whoops. I’m a fool in many ways apparently!
Dude I have made so many mistakes, and despite that I’m on track to retire well ahead of 65 (one of my “oops” was selling a few dozen shares of Home Depot in the late 90’s. If only…) .
As a matter of fact, my wife and I just discussed our situation this morning and we think we are FI right now, but neither of us are miserable at work (in fact we’re both pretty content) so we are going to keep on keeping on with the very satisfying knowledge that if anything changes with either of our work situations we can give a one fingered solute and still enjoy a very happy retirement.
Thanks for answering!