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.
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