Hi Tommo,

As soon as I joined this board I read your posts with great interest.  At some point-and now is the time-I was goint to thank you for your input. So-a big thank you for your insight!!!!!!!!

Since I am retired I have plently of time to watch the market-some days too much time.  I do not get involved with options.  However-if some market killing news comes out-I sell my shares and pick up more at a lower price.  And no-I could not do that Friday-darn it-as I did that a couple days earlier-three day wait.

I guess I am rather a simple investor-try to pick the correct stocks-and go with the market flow-always stay in the stock-but always on guard to get some more shares.

Your comments give flavor and insight into the market and apple.  Makes each day more interesting. 

dave

P.S. Bought an iphone to be able to check on apple when I am somewhere on a vacation.  No need to carry a computer around. 

Re: Sticking with AAPL in 2008: investing beyond Macworld

[quote author=“Tommo_UK”]Good morning and Happy 2008! ..........

This could result in a wild run-up of $10-15, or a rapid sell-off to $180.

......... and simply hold as large a position as you can comfortably achieve which won’t result in you being whipsawed/liquidated by wild 10-20% swings. Perhaps a steady hand and less trading is the order of the day for 2008. ..............

Rule #1: do not get whipsawed out of your stock. .........

Just catching up on my reading after being somewhat busy the last few days; sorry to be so slow in responding.  Excellent post.  Sound thesis.  Good advice.  I won’t repeat the whole post here, but do include what I believe are a couple of the most important points.

It is hard to give broad advice that applies to everyone.  But readers in any of the following categories, do well to consider carefully what Tommo writes in this thread’s original post:  a) new to AAPL, b) new to investing c) anything but expert trader d) long but on margin (see rule #1).

Perma bear Doug Kass has his 20 predictions for 2008. He predicted the sub prime mortgage mess of 07 so he gets some right :o
anyway here is one of the 20

’‘11. With the economy weakening and corporate profits tumbling, investors pay up—real up—for growth. The three horsemen—Research In Motion (RIMM) , Apple Computer (AAPL) and Google (GOOG)—move into bubble status, and short interest triples as the naysayers increase their bets. Their shares double in 2008 even as most equities decline. ‘’

for a complete list

http://www1.investorvillage.com/smbd.asp?mb=5029&mn=18877&pt=msg&mid=3801129

Obviously the major concern is whether the economy is in a real recession. As AAPL investors this is something that it is difficult to position against. There is no doubt that Apple will continue improving with innovative products and that market share will continue to increase in the foreseen future. However, what nobody can predict right now (or at least I can’t) is what would be the actual PE of a outstanding company in a recessive environment. Apple closed on Friday with a forward PE of 28.22. The lowest I remember in recent Apple history is a PE of 23 which would imply a stock price of $146. What I can say is that I am not ready for such nearly 30% drop from the highs. It was in April 2005 when this last happened and I even lost my suit. My strategy has been keeping a long term base position (highly leveraged) while buying and selling parts of it at support and resistance points around AAPL price. With time and as my equity increased, the base position has also been growing, always allowing for a drop of 20 to 25% from the most recent all time high. I do not place stop orders anymore because I had a very bad performance when I used to do it.

I surely hope that AAPL does not go underground (that is about $160 for me). My last sell was $198 on December 24 (Christmas log gift). My last buys were on Friday at $189 and $182. I will keep buying lower until my equity evaporates due to a margin call, because this time I have no funds to add to my CFD account, I will consider myself a market victim instead if this happens. However, a come back to the highs would give me unprecedented returns.

move into bubble status, and short interest triples as the naysayers increase their bets. Their shares double in 2008 even as most equities decline.

This statement sounds like an oxymoron.  Could you explain this in layman terms?
Is he saying these stocks will be short squeezed to double in 2008?

[quote author=“macglenn”]

move into bubble status, and short interest triples as the naysayers increase their bets. Their shares double in 2008 even as most equities decline.

This statement sounds like an oxymoron.  Could you explain this in layman terms?
Is he saying these stocks will be short squeezed to double in 2008?

Layman here. I took it to mean investors wouldn’t dare put their money into anything but these stocks, so that despite reduced growth, the price would bubble up. And short squeezes will increasingly help the bubble. (Like AMZN and RIMM recently)

[quote author=“macglenn”]

move into bubble status, and short interest triples as the naysayers increase their bets. Their shares double in 2008 even as most equities decline.

This statement sounds like an oxymoron.  Could you explain this in layman terms?
Is he saying these stocks will be short squeezed to double in 2008?

My reading is that as Apple moves up in 08 against the economic headwinds it will be shorted more and more as the thinking is this move up is crazy considering weakening consumer etc. As Tommo points out Apple will still be selling products and growing because consumers have ‘‘limited resources’’ and will buy what they trust.

Who’s going to give up their cellphone? But with an iPhone & public wifi spots I can see quite few people giving up their home phone, broadband, cable contract when sacrifices are needed. Convergence can be a cost saving, despite the monthly fee.

I currently hold 694 AAPL shares. Less than a hundred were bought at about $122. The bulk was bought at the end of October at $187 and $189, and about 200 were bought at $175 in mid-November. November was scary, and December was weird. I was telling myself that I needed to stay with AAPL until the end of Macworld or perhaps the Q42007 earnings report, so I should just stop sweating it. I was contemplating trying to sell high and buy low in November and December, but decided against it, mostly for the lack of experience. Now I believe I made a mistake, especially after what happened on January 4, when my portfolio dropped by $10,326.72 in one day alone. It was obvious in the morning that there would be a big sell-off. Had I sold in the morning, I would have been able to pick up 55 more shares at the end of the day. Had I been doing this through November and December, I would probably own 1,000 shares by now.

From the way that AAPL (and the rest of the market) been acting in the past month and a half, there were numerous opportunities to sell high and buy low. Normally, no one knows for sure where “high” and “low” are. But because the market has been swinging so insanely, it was almost impossible to miss a low. It is true that one could sell, thinking it’s “high”, and the stock could have risen that day. But as long as you held on to cash for a few days, the market would have come back below your selling price.

I was hoping for Macworld and the earning report to boost my portfolio for a few months now. That’s why I invested 100% in AAPL. Even with yesterday’s collapse, I am not upside down just yet. But if another sell-off like this happens on Monday, I will be in bad shape. I will stick to my guns until Macworld (or possibly Jan 22), but I am not so sure what the strategy should be beyond Jan 22. Apple is a great company, but the way stock market functions is totally irrational. The Fed cut interest rates in December, and instead of giving a boost to the stock market, it caused the ever accelerating downward spiraling. That just makes no sense. The housing debacle pulls AAPL down every day there’s bad housing market news even though housing has nothing to do with Apple. I have not yet seen a single trading day since I started watching the market very closely (some time in late October) when AAPL reversed the falling-stock-market trend. Not a single day! Usually AAPL holds its ground until some time in early to mid-afternoon, and then follows the market trend by the end of trading day. I believe 2008 will be a very difficult year for the stock market. Even though AAPL seems to be a great refuge for investors in the current market conditions, I just don’t see many people trying to flee to AAPL. So, can anyone give me a good reason why AAPL is not going to follow the stock market down to the gutter shortly after Q42007 earnings have been announced? After all, the predictions that AAPL will rise around Macworld that everyone was so sure about doesn’t seem to be happening. If Macworld boosts AAPL, it will be back where it was at the end of 2007. I just cannot see it going to $225 any time soon.

I am no expert in stock trading and am posting this to get others’ perspective.

[quote author=“sirozha”] ... Q42007 earnings report ...

Q1 2008.  You talk like Superbaka in Jan 06.  I’ll wait for Superbaka to respond.  If I’m not wrong, he bought around $80s, disillusioned when AAPL declines to $50s but held on and is sitting on more than 120% gains.  Scary is relative.  There are a few long term investors here that hold AAPL through 2000-2003 (AAPL essentially is dead money then) having bought them around $37s in early 2000 - sitting on close to 4x gain ... better than legendary WB.  Edit:  I DCA buying into AAPL between 1997-2003/4.  Imagine how I feel during 2000-2003?  AAPL got clobbered to less than 10% of early 2000 high.  Note that I continue to DCA buying between 2000-2003 against advice from some ex-analysts’ friends who strongly advise to sell based on business fundamentals and technicals .  They’re right but SJ is what I believe in.  IMHO, can ignore business fundamentals and technicals, all kinds of cheerleading and doomsaying.  So long SJ is around, AAPL would continue to go up up and away.

SNIPUS,

Which price did Doug Kass said AAPL would double from? $150, double=$300.  $200, double=$400.

[quote author=“sirozha”]I currently hold 694 AAPL shares. Less than a hundred were bought at about $122. The bulk was bought at the end of October at $187 and $189, and about 200 were bought at $175 in mid-November. November was scary, and December was weird. I was telling myself that I needed to stay with AAPL until the end of Macworld or perhaps the Q42007 earnings report, so I should just stop sweating it. I was contemplating trying to sell high and buy low in November and December, but decided against it, mostly for the lack of experience. Now I believe I made a mistake, especially after what happened on January 4, when my portfolio dropped by $10,326.72 in one day alone. It was obvious in the morning that there would be a big sell-off. Had I sold in the morning, I would have been able to pick up 55 more shares at the end of the day. Had I been doing this through November and December, I would probably own 1,000 shares by now.

From the way that AAPL (and the rest of the market) been acting in the past month and a half, there were numerous opportunities to sell high and buy low. Normally, no one knows for sure where “high” and “low” are. But because the market has been swinging so insanely, it was almost impossible to miss a low. It is true that one could sell, thinking it’s “high”, and the stock could have risen that day. But as long as you held on to cash for a few days, the market would have come back below your selling price.

I was hoping for Macworld and the earning report to boost my portfolio for a few months now. That’s why I invested 100% in AAPL. Even with yesterday’s collapse, I am not upside down just yet. But if another sell-off like this happens on Monday, I will be in bad shape. I will stick to my guns until Macworld (or possibly Jan 22), but I am not so sure what the strategy should be beyond Jan 22. Apple is a great company, but the way stock market functions is totally irrational. The Fed cut interest rates in December, and instead of giving a boost to the stock market, it caused the ever accelerating downward spiraling. That just makes no sense. The housing debacle pulls AAPL down every day there’s bad housing market news even though housing has nothing to do with Apple. I have not yet seen a single trading day since I started watching the market very closely (some time in late October) when AAPL reversed the falling-stock-market trend. Not a single day! Usually AAPL holds its ground until some time in early to mid-afternoon, and then follows the market trend by the end of trading day. I believe 2008 will be a very difficult year for the stock market. Even though AAPL seems to be a great refuge for investors in the current market conditions, I just don’t see many people trying to flee to AAPL. So, can anyone give me a good reason why AAPL is not going to follow the stock market down to the gutter shortly after Q42007 earnings have been announced? After all, the predictions that AAPL will rise around Macworld that everyone was so sure about doesn’t seem to be happening. If Macworld boosts AAPL, it will be back where it was at the end of 2007. I just cannot see it going to $225 any time soon.

I am no expert in stock trading and am posting this to get others’ perspective.

Welcome

I started with a mere $6K a few years back.  Even before I discovered this forum I believed in Apple for the long haul that I took a 2nd on my house in 05 and put $20K into aapl.  In the summer of 06 I was underwater by 38K and even got a margin call.  I did not panic but held on.  After reading tommo, posts I have kept buying on margin for the last year and a half. If I sold today I can be debt free.

I truly believe that in 2 years, I will be semi retired at 39 and in 5 I can fully retire just with aapl.  And 10 years from now I will a multimillionaire.

My advice is to keep the stock, unless you are on margin and need to dump some of it.

This stock goes up and down a great deal and you just need to hang on.

sirozha:

While no one likes to see the sell off we experienced on Friday, it does have a benefit ... especially to those who are new to AAPL ... in that it provides a real world test of how truly risk averse one is.  I think it is wise to pay attention to what you are experiencing so that you can learn from it.

I think that as long as you are holding shares and are not using margin, you can simply ride things out ... I have owned AAPL (both shares and options) over the past few years and continue to believe it will be the one to beat over the next couple years ... however, you have to do what is best for you ... if you can’t sleep at night, then maybe you need to lighten your position a little when the stock recovers.

My investment in Apple went down $70K this last week but I had over 300K increase in 2007 . It should have been well over 400K increase but I tried to trade this stock and seemed to buy back most of the time at a higher price , thus losing share each time . My suggestion to Sirozha is to decide if you are sold on Apple , if so , stick with it with most of your money for the long term . Apple’s earnings should support the stock price for at least a few years . Apple is an extremely volatile stock and the crooks on wall street will try and scare you into selling and you will accommodate thinking you will buy back at a lower price but most will find out that the hedge funds and other crooks will be 10 steps ahead of you . I have learned my lesson , I can’t beat professional crooks and you want either most of the time. Use this forum for support to hold down your anxiety .

[quote author=“Derrick”]sirozha:

While no one likes to see the sell off we experienced on Friday, it does have a benefit ... especially to those who are new to AAPL ... in that it provides a real world test of how truly risk averse one is.  I think it is wise to pay attention to what you are experiencing so that you can learn from it.

I think that as long as you are holding shares and are not using margin, you can simply ride things out ... I have owned AAPL (both shares and options) over the past few years and continue to believe it will be the one to beat over the next couple years ... however, you have to do what is best for you ... if you can’t sleep at night, then maybe you need to lighten your position a little when the stock recovers.

The sell off also creates a buying opportunity for those reluctant to jump in close to $200 per share. Looking at it another way, jumping in now provides for an immediate 7%+ gain when the shares return to $200.

[quote author=“macglenn”]

move into bubble status, and short interest triples as the naysayers increase their bets. Their shares double in 2008 even as most equities decline.

This statement sounds like an oxymoron.  Could you explain this in layman terms?
Is he saying these stocks will be short squeezed to double in 2008?

I understand Kass post like this:

Bubble-status means investors look at AAPL as a kind of recession-proof stock. Demand for recession proof stocks will be enormous. Money will pour into these stocks. But this will also encourage the now fully nuke-armed Wilde Bears into a daily-routine triple-speed AAPL nonstop full shorting mass-mastubation and mass terror.

This will mean wilde rollercoaster outbreaks and movements @ the speed of light -> frequently pulverising most peaceful dayTraders tools and rules, like toothpicks in the mouth of a Moby Dick. High voltage danger -> nukes -> no rules