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Yet another note on AAPL and the market in general



May 08, 2013 – Comments (4)

I put my money where my mouth is last month; when I posted about AAPL's insanely low valuation, I doubled my stake.  I was already overweight AAPL to begin with, even though I was playing with 'house money' - I had had my starting capital back years ago; doubling my stake resulted in a 20% allocation to AAPL.

Well, the additional shares, purchased at $402, were showing a 15% gain for 3 weeks of exposure.  I pulled the trigger, sold 'em and locked that in.  AAPL has more upside, I think, and I'm happy to wait for it with a 10% allocation instead of a 20%; I never like to have all my eggs in one basket.

I think this bull has a little more room to run, by the way, but I think we are starting to exit the realm of value-priced stocks and beginning to visit the low-volume, high-froth time that Wall Street always has when a good long bull rally is starting to get winded and prepare to conk out.  I am watching earnings and valuations and charts, and trying to exit any positions where the left-concave hyperbola is changing into a down-concave parabola, taking profits along the way.

For what it is worth, I have no reliance on Fedspeak, unemployment or inflation targets.  I have no idea when Big Ben will put the stopper back into the drain by raising rates or stopping asset purchases, but whenever it happens, it wouldn't surprise me.  I expect some stalwart dividend paying names to take it on the chin when it does, too. 

4 Comments – Post Your Own

#1) On May 08, 2013 at 7:12 PM, awallejr (35.12) wrote:

Well I still expect this stock to hit over $500 by at least when they announce new products, but can't fault your action since 20% is a big chunk of your portfolio.  The biggest problem with selling is what to do with the profits. 

Lately I have been building a position in AINV.  Another BDC still selling for cheap with a high yield and potential to grow.

As for Uncle Ben I have predicted his behavior best than anyone on this site since 2009.  We still have a couple years before any slowing down will occur and tightening.  There is nothing on the horizon that indicates unemployment will drop quickly nor is inflation yet a threat.  An aging population will spend less, and GDP is 70% spending. Immigration will be important.

I don't understand why all of a sudden people are seeing what I and others have been saying for years here, you want yield then the stock market is the place to be.  My very first blog on this site was buying dividend stocks.  My timing just sucked by 1 year (story of my life I suppose).

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#2) On May 08, 2013 at 9:02 PM, L0RDZ (91.65) wrote:


So did  you buy  like  7  shares   like  awall did ??

I may  come across as  a tool  but  I  hate   the  term  thrown  around " Playing  with  the house  money ? "  made famous  to  most by Crammer...

And  while  you  did  post  a  few apple  blogs,   your  analysis  of  apple's  dividend rate   was   incorrect  ?

I  hate  when  JIm  suggests  that  people can   take  out   their  original  stake  in  a company  and  just   keep  what-ever profit they  may  or  may not  have   and   its  okay  to  just  let  that ride  and  well  hey  if   they  lose  that  $$$   its  alright  ~~~   its   not  their  $$$   its  somehow  the  houses  ??

WTF  kind  of  silly  advice  is  that  ?    hell  for  most  people  when  they  select  a  stock  unless  they  get  in  on  the  lifetime  lows   like  back  in  09  or  a   really   good  low   point  on  some  other  crazy  like  event  ?    ~~~   most  people  will  find  with  the  new  age  of  stocks  that  somehow   their  stocks   are  now  trading  for lower  amounts.

Such  that  like  Wall  JR   has   reccomended   its   best   to buy  stuff   in   stages   ~~~   but  most of  us  know  that...

So  what  was  my  point ?    you  feel    bad   when  you sell at  a profit  and   you  realize  later  that  had  you  not  sold  you  would  have   made   more  money  in  that  stock  ~  but   had  that  stock  than  later  tanked  on  you...   you  feel  a  bit  of   relief  that  you  were  disciplined  or  just  lucky  to  sell  it   at  a  profit.

More so  my  point  is   don't  fall  for silly clique  lines  like  I'm  playing  with  the  houses  money...  

Unless  some  house  gave  you something  for  nothing...  my  fellow  fools   you  are  playing  with  your  money...  don't  ever  let  anyone  tell  you  otherwise.


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#3) On May 08, 2013 at 9:54 PM, ikkyu2 (97.96) wrote:

"House money" is indeed a Cramer term.  Cramer makes a lot of points that have to do with the psychology of the retail investor and how if you don't understand what that psychology is, it can work against you.  I am a very typical retail investor - main st., not wall street, and I am subject to the same flaws and doubts.  Playing with free money is liberating; it lets me really consider what the right thing to do is.  Holding 20% of my retirement portfolio in one stock is not the right thing to do.

I reviewed my investment journal last year and identified some facts; one of these was that I was fantastic at picking stocks and terrible, just terrible, at knowing when to sell.  Since then I have been trying to exercise some discipline about sell decisions, considering them more frequently, paying attention to asset allocation, trying not to pull out flowers but also not to water weeds.  Ran across a Bernard Baruch quote lately, "I made all my money by selling too early" - and have been trying to keep it in mind.  In any event the old "house money" adage helps me take profits but not totally pull out the flowers; so far I have done well by it, at least in stocks where I've managed to get that one-bagger.

You are right that I did not correctly state AAPL's dividend yield (not rate) in my last blog, which at the time I was posting was about 2.7% annually.  It has changed due to price movements and is now closer to 2.4%.  I generally do not subtract more than 1 P/E multiple point when evaluating a dividend paying stock's valuation because dividends, unlike earnings and share price, are fungible and subject to change at a moment's notice in future.

Also, yield to basis is not the same as yield to share price and so focusing too heavily on either number can be confusing for people who may be intending to hold a stock during a period in which the price goes up.  I reinvest dividends - largely because it makes it easier for me to track my gains and because my portfolio is tax-protected in a Roth IRA - and so I am always thinking about yield to basis, even though I am getting new shares at current cost.  Can be confusing.

I don't disclose my actual position or portfolio size.  To some it would seem like a huge amount of money; to others, laughably small.

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#4) On May 09, 2013 at 12:59 AM, awallejr (35.12) wrote:

Oh Lordz you are preaching to the choir about Cramer.  His advice is hypocritical.  He says never buy and hold, but if you doubled on your investment he says sell half and forget the rest. 

And I have 13 shares of AAPL;p

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