Oh no....I just bought $16K worth of Apple and am already down $300!
I bought the 85 Apple (AAPL) shares this morning at $186.88 (see screenshot below) based on what I have been reading over the last few weeks and on the potential growth from their upcoming new I-phone, launching next week. The stock is now below $184, three hours later so I am already down $300+. Did I pull the trade trigger too early and make investing mistake 101 by buying at the top of the market and into the hype like I did with Visa a few weeks ago (luckily that stock has recovered a bit).
I am now watching the market and this stock very anxiously.....perhaps this was too big an initial investment, given it is now making up almost 40% of my current portfolio. I still like it for the medium term though and believe it is a $225 stock by the end of summer.
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[See an Update to this post here : My shiny new iPhone and why I bought Apple]
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June 3, 2008 4:25 PM
First of all, thank you for leaving a comment on my blog, PFStock; I appreciate it. It looks like you have a nice blog here.
If you really believe that AAPL will be $225 by the end of the summer, then you shouldn't fret about a decline of a few points here and there. But, I sense that you are not completely certain about your recent purchase. In which case, 40% of your current portfolio is perhaps too big an initial investment. Instead, you might consider making smaller purchases over time, or diversifying some more.
June 3, 2008 5:17 PM
Thanks pfstock. I over reacted a bit today as I do have a long term view on this stock and off course had to make the post a bit interesting. While it does make up 40% of my portfolio currently I am planning to invest about $10K more (my bonus this year) in some Vanguard funds, so it should come down to about 25%. I'll know when I do my next portfolio update.
However you are right, a more prudent approach would have been to start with a smaller holding of 5K at a time. Still, I wanted to get in ahead of the announcement next week about the new i-phone and felt that this is the cheapest the stock will be for a while. It finished up at $185 today so my loss was not that much.
Good to have discovered your blog as well, I will be adding you to my blogroll.
Cheers,
Andy.
June 4, 2008 11:28 AM
These are 2 other articles/blogs with some great info on upcoming stock price action with Apple:
WSJ:
http://blogs.wsj.com/marketbeat/2008/06/03/the-end-of-apples-golden-age/?mod=MostPopular
Fortune Blog:
http://apple20.blogs.fortune.cnn.com/2008/06/04/investing-how-to-cash-in-on-the-3g-iphone-buzz/
June 4, 2008 12:57 PM
I felt the same way as you did back near the beginning of the year when I bought $5k worth in advance of earnings at $161/share. I thought I was getting a pretty good discount off the high of around $200, and would see a nice bounce when Apple announced their big holiday numbers. Well, not too long after my purchase came the slide to a low of $115. Needless to say, I wasn't feeling too good at the time, but I kept telling myself I bought as a long-term investment, and now that it's over $185 with big things to come this year, I'm quite pleased. Ultimately, I think you will be too.
June 4, 2008 1:44 PM
That's true ! Think of this as a long term investment and you wanna sell your AAPL stock at $600 in 2009 !!! no kidding, sales of iphones in all those highly populated countries will prove this sooner.............
June 4, 2008 4:33 PM
you have guts man ...
my opinion the stock is going to trade much lower
15-20% after the June 9 show
however I am long and I owned this stock since 1999
and I trust an share Steve Job's vision.
if you can take the ups and down and have enough balls to buy more when the stock trades lower
then in 3-4-5 years you will be very happy
but remember to buy smaller lots, there are always corrections and more opportunities to buy more.
Dollar cost averaging works
June 4, 2008 5:09 PM
AAPL is a very volatile stock, and if short-term gains are what you were after, I'm guessing yesterday wasn't necessarily the best time to buy (though it may not be a bad time either). Next weeks' announcement may make the stock go either way: I've been long AAPL for a couple of years, and follow the technical aspects of the company closely (I'm a software developer), and what seems like awesome announcements sometimes make the stock dive (or not).
However, in the medium-long term, I do think you should see you $16K go up by a few K$'s, and in the event the Monday keynote does indeed propel the stock up, that sort of perspective made it a good decision IMO.
June 4, 2008 5:36 PM
As someone that has been making money off of Apple trades for the past 6 years, I can easily say that this is not a permanent problem. I hoping to get in on some more calls tomorrow before the announcement.
For the record, I also think they're going to announce a portable tablet type device. That could be wishful thinking but it looks like the next logical progression...
June 5, 2008 12:49 AM
You are INVESTING, not TRADING. Keep repeating until you stop obsessing about your investments.
June 5, 2008 8:42 AM
@ James - thanks for the calming words and your story. I am much more relaxed about my investment now.
@ hitesh - I hope it hits $600! That'll pay for my kids college. I am hoping for a $225 to $250 target by year end.
@ anonymous[2] - DCA does work and normally I would use it to build a position, but I felt that getting in before June 9 was key to benefit from the most upside. Tiime will tell.
@ Daveed - It is a medium term stock for me and so am now more comfortable after the relatively sudden day 1 loss. Thanks for your words for encouragement.
@ frank - Thanks for sharing your history and positive outlook. With this and other comments I feel much more comfortable about my invesmtment and the research I did.
@ KC. I am investing, not trading. I am investing, not trading....thanks! I think the amount I started the position with is what caused me to obsess. For me personally it is the biggest one time investment I have made here.
June 5, 2008 2:41 PM
I took a 15% loss in 5 days when I bought apple earlier this year. Take precautions.
June 18, 2008 10:48 PM
OK, A couple of things. First if AAPL went to $600 how on earth would that pay for your kid's college?? At $600 your 85 shares are worth $51k. Even today that would barely cover two years at any good school. And college costs rise way faster than inflation.
Second, if you are fretting about losing a few hundred dollars than you really shouldn't be invested in the market. At least not in individual stocks. I don't day-trade and most of my investments are held for well over a year. I have a very conservative portfolio, and even then it swings by as much as $50,000 in a single day. You need to be willing to deal with some volatility if you're invested in stocks, especially in this current market. I like the long term argument for AAPL as well and I've been holding it for years and plan to continue holding it forever maybe. But I also wouldn't be too shocked to see it go down another $50 bucks. This market is worse than you probably imagine.
July 1, 2008 9:00 AM
Are you a day trader, or long term? Because anyone who is long term and would invest in a no yield, no dividend stock needs to have their head examined.
And now AAPL is down to $167.44.
Nice.
July 7, 2008 12:00 PM
I bought 500 shares of Apple two years ago at $65. Within weeks, it was trading well below $60. I was probably just as worried as you seem to be now. But I hung in there and look at it now!
Keep the faith!
July 8, 2008 9:00 AM
This post has been removed by the author.
July 8, 2008 9:00 AM
anonymous #3 - Thanks for the words of caution. I am thinking of getting some puts on the stock before earnings are released.
Anonymous # 4 - Okay, maybe I was a bit idealistic with the College idea. However my kid has 18 years before college, Apple should have split many times over by then if current growth continues for the next 3-5 years (which is definetly possible). I am holding on to the stock for the long term, this post was exaggerated to make it more interesting and catchy. I am not really worried about a $300 or even $2000 loss in the near term per some of my earlier comments.
@ Sirbeef: I am not a day trader. Per some of my earlier comments and follow up post I explained the reasons I bought the stock. Check them out. I know you are a strong dividend advocate, but I like to have some of my portfolio in growth stocks given my investment horizon and better risk/reward prosspects.
@ Anonymous # 5 - Thanks for the encouragement. I am holding on for the long term and have a lot of faith. Earnings, coming up soon, should be interesting. Good to see you have done so well. If you still hold your stocks now you have got your self a triple bagger. Excellent.
Thanks to everyone for stopping by and making a comment.
August 1, 2008 4:43 PM
156 now. i would stay in long term and maybe buy some more at these lower prices. i say good investment.
August 4, 2008 11:42 AM
@ Ben - Definetly long term for me now. Still it is dissapointing to see the stock continue to fall despite such a strong future. I was at an Apple store recently and there were still lines for the new iphone 3g, almost a month after it was released! amazing.
August 8, 2008 11:56 AM
At least you did not buy CROX at $40 like I did. Bad decision...very bad...
August 25, 2008 6:56 PM
why so much?
$5K is enough to invest in AAPL