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reddingrunner (95.28)

Why AAPL is still the one stock to rule them all.

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August 22, 2012 – Comments (5) | RELATED TICKERS: AAPL , AMZN

Spoiler Alert:  Because it will become the world's greatest dividend stock.

AAPL still has lots of room to grow internationally and in corporate sales.  It won't grow as fast as it has, and it's margins will shrink some.  

Say it slows way down to a 15% (after inflation) annual growth rate for the next decade, 10% for the decade after that and 7% for the decade after that.  Some will think this too optimistic, others, looking at the past decade will think it too conservative.  I think it's as realistic an estimate as any.

You are 30 years old.  

You plan to retire in 30 years.   

You invest $12K in AAPL today.

In 30 years your AAPL stock, inflation-adjusted, is worth approximately $300K, based on the assumptions above.

And it's paying, realistically, a 4% dividend.

Yep, that's $12K a year, $1K a month, inflation-adjusted.

That's not enough to retire on, but, hey, it's a pretty nice chunk, all from that single $12K investment you made back in 2012. 

In November 2006 I made the one big bet of my investing career.  I determined that Apple was going to rule the world and I put 1/3 of my investible assets into AAPL.  It wasn't much, unfortunately, but it was still a huge bet.  They told me I was too late, after all, it had grown 10-fold in the past 7 years or so.  Every few months since then some expert has written an article telling me why I should sell AAPL NOW! and take my profits.  I did sell some of it at $400 in the name of diversification.  Shouldn't have, but I'm hanging on to the rest forever.  It's still my one buy and hold forever stock.  It should be yours too.

Pretty soon I'll be making another huge bet, the second of my investing career.  Probably 25% of my investible assets (a lot more than I had in '06).  That will be the subject of my next blog. 

 

5 Comments – Post Your Own

#1) On August 22, 2012 at 12:39 PM, EWLees (< 20) wrote:

Truth. I can't imagine Apple coming out with new products that will revolutionize an industry like its Ipod did back in the early 00s. After the Ipad Mini I think they will lose big portions of their dominant market share to Droid and potentially Microsoft (Surface might be the start of something big). Apple can't afford to have a new Ipad that doubles as a laptop because it will cannibalize their existing line of Macbook laptops. Target: $850.

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#2) On August 22, 2012 at 10:28 PM, awallejr (83.97) wrote:

MSFT would never scare me as long as Ballmer is CEO, but that new Samsung Galaxy 3 actually looks pretty sweet.  Hard to predict what a tech company will do over a 30 year time period.

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#3) On August 23, 2012 at 1:07 AM, reddingrunner (95.28) wrote:

Hard to predict anything over a 30 year time period.  We might all be slaves to Klingons in 30 years.  But the only way to plan for retirement is to make your best guesses for 30-50 years down the road and build a plan around them.

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#4) On August 23, 2012 at 1:14 AM, awallejr (83.97) wrote:

No.  Do it in 3-5 year periods with re-evaluation of ones' thesis.  Absolutely nothing wrong with shifting one's portfolio over time as the circumstances change.  Buy and forget is a bad investment strategy.  Now buy, hold and monitor is another matter.

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#5) On September 08, 2012 at 10:51 AM, Herbstmd (51.26) wrote:

I had a similar happy experience with Aapl. 4 years ago I put 2/3 of my devastated funds ( that I had had in mutual fund run by an agent who did not care,) left from the 2008 debacle into Aapl. Smartest move in the world. What a wonderful comeback. Now I have still over 50% in Aapl and I will not sell any until it is over 750 or so.

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