my first aapl investment

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    Posted: 16 September 2011 09:04 PM

    Perhaps, as we stand on the cusp of a new high I?m feeling nostalgic.  Maybe you are too.  (Or perhaps I?m stuck on an airplane without wifi and am bored and decided to inflict my musings on y?all.)

    This is the story of my first AAPL investment.

    In the early nineties, I made what for me was a big bet:  I bought 1,000 shares of AAPL @21-ish, lost faith shortly thereafter, and bailed out @18.  I was a young investor; it was my biggest stock market bet ? and loss—ever.  I was in the thrall of my Performa 638 CD-TV.  It took me a while to recover.

    I came back to the stock when SJ returned and Gates ?invested? his $150 m (we now know it was a legal settlement); it was around the time of the Bondi blue iMac, which also stole my heart.  Somehow, I gleaned that MSFT?s antitrust insurance policy involved keeping Apple alive, and that there was literally nowhere to go but up. I rode about 8,000 presplit shares of AAPL from the teens and 20s and 30s and sold out in the 30s, 40s, 50s and 60s.

    Should I have held onto what would now be be 16 K shares, even though the stock plunged way, way down in the intervening years, after the Mac Cube disappointed?

    Tough question:  What would the opportunity cost have been?  Might I have thrown in the towel at the bottom?  The answer is unknowable.

    Another good call came 10 years ago, when I thought I ?got? the iPod.  (Apple was trading around $12 and had $7 or $8 in cash ? really, folks, what was there to get?  And yet WS did not get it.)  It was a smallish investment this time: even if they sold 10 million iPods, I figured, it was ?only? $3 billion ? ish in revenue.  Oh well.

    Like many investors, I?m schizophrenic.  Days like today, I think you can?t go wrong in the long run by buying a great company at a reasonable price, and holding on tight.  And that?s what AAPL is today at $400:  the world?s greatest company, at one of the world?s most reasonable prices.  Today, I think you?d have to pry my AAPL shares from my cold dead hands, to paraphrase Charlton Heston.

    Other times, I parrot the old adage:  Never fall in love with a stock, because it will never love you.  I succumb to trading (fear/greed), or playing options (fear/greed).

    I?d be interested to read other people?s Apple investment stories, and the lessons and investment philosophies they?ve gleaned from them.

    So tell us your Apple investment stories.  When did you first buy the stock?  Did the products pull you in?  Do you trade, do you buy and hold, or do you do both?  Do you trade options?  If so, are you looking for the big score, or to hedge?

    Do you think you?ve gotten it mostly right?  A lot of it is there in the archives, but I would be grateful if some of the more prolific posters here ? you know who you are ? would synthesize their learnings, thoughts and reflections, for the benefit of this newcomer and for the entire community.

    $400.50. A new milestone awaits. Be grateful, reflect on the past, and look toward the future.

    Thanks in advance, and good luck to all.

    [ Edited: 16 September 2011 09:15 PM by Xtra ]

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    Posted: 17 September 2011 11:15 AM #1

    Xtra,

    Welcome to AFB, my story would be similar to many older AFBers (those joined earlier than 2007).  Dollar cost averaging purchased AAPL from 1997 (return of SJ) to 2004 (when SJ health issue emerged).  Average cost is about $10.  Sell some annually from 2005 to date.  Prices sold at:  $30s, $50s, $80s, $130s, $160-$200, $260s, $350-$370.  Proceeds used to fund expenses like purchase of houses, repaying of housing loans, purchases of cars/furniture/branded clothes/vacations.  Was living “hand-to-mouth”, no savings till 2004.  Glad didn’t let go of all AAPLs in 2004, otherwise would be the greatest regret of my lifetime, still could have more $ if didn’t sell those AAPLs from 2005 to date, OTOH, I would still be living like a “beggar” if didn’t sell.  I think the main difference with other AFBers is that they are still accumulating AAPLs (usually from a small % towards a larger % of stock portfolio) while I’m selling since 2004, have to since I’m all-in 100% whatever spare $ I can squeeze out e.g. From 1997 to 2004, didn’t get any new clothes and no eat outs.

    I have a few criteria for determining when to sell all AAPL holdings e.g. Market cap of AAPL greater than MSFT’s - AAPL’s market cap is still below the max market cap of MSFT in 2000;  SJ is no longer with Apple - He is still the Chairman; and AAPL hits $1 trillion market cap - AAPL needs to triple before that happen.  So I’m still holding a fair bit of AAPLs.

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    Posted: 17 September 2011 02:00 PM #2

    Mace,

    Thnx for your post, and for your welcome.

    Wow—let;s just say my current average cost is many multiples of yours. 

    What led you to your initial investment?  (Products, valuation , blind luck??)

    Thank you in advance and have a great weekend..

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  • Posted: 17 September 2011 03:01 PM #3

    Xtra, I made my first investment in AAPL after the stock tanked in 2000. This was after the Cube. I had been following Apple and AAPL since 1996 when I bought my first Mac, PowerMac 7500. At the time I was investing in mutual funds. I had the belief that I didn’t really have the knowledge to do my own investing. I was an avid reader of Wes George’s Apple investing column in the Mac Observer. Kept thinking about investing but my son was a baby and I thought the prudent thing was to stay with my funds. In 2000 the market crashed and I wound up selling my funds at the bottom. It was about this time that OS X came out and I was convinced it would be a game changer. I bought at 22 pre split, and then when it dropped to 17 I bought more. I actually was ready to transfer the remainder of my IRA money into Apple but unfortunately for me the Schwab account person on the phone questioned me on putting all my money into Apple. He should not have said anything, should have just placed the order but he said enough to spook me and I missed out on investing more money at $17. Have held on ever since, have not invested in options, Leaps, etc. Resisted cashing in for a big home renovation project that we did, still drive a 10 year old car, etc. Was able to retire 3 years ago at 55 feeling confident with my AAPL investment. We live pretty modestly, only my wife and kids know that we are relatively well off. Take lots of great vacations buy pretty much what we want, but it’s all on my wife’s income. Planning to hold on to my shares, believe the future is very bright with AAPL. Hoping to see a $trillion Market cap, eventually dividends.

         
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    Posted: 18 September 2011 10:26 AM #4

    Xtra - 17 September 2011 05:00 PM

    ... What led you to your initial investment?  (Products, valuation , blind luck??) ...

    Thought is obvious.  Return of SJ to Apple.  Then, I have no idea what is a Mac, don’t know how to use a Mac at all so forced myself to learn how to use a Mac.  Don’t know Apple financials at all, buy first find out later.  I’m a SJ worshipper not an Apple/Mac fan.  No idea about Apple future, just blind faith that SJ would do something great, he would succeed unless God forbids him.  So, I would allude this miracle of the lifetime to luck.

    [ Edited: 18 September 2011 10:29 AM by Mace ]

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    Posted: 18 September 2011 12:13 PM #5

    Mace - 18 September 2011 01:26 PM
    Xtra - 17 September 2011 05:00 PM

    ... What led you to your initial investment?  (Products, valuation , blind luck??) ...

    Thought is obvious.  Return of SJ to Apple.  Then, I have no idea what is a Mac, don’t know how to use a Mac at all so forced myself to learn how to use a Mac.  Don’t know Apple financials at all, buy first find out later.  I’m a SJ worshipper not an Apple/Mac fan.  No idea about Apple future, just blind faith that SJ would do something great, he would succeed unless God forbids him.  So, I would allude this miracle of the lifetime to luck.


    Wow, now this is amazing. Mace, you never cease to amaze me. Such honesty is refreshing.  :innocent:

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  • Posted: 18 September 2011 12:41 PM #6

    I had been watching Apple with interest once Steve Jobs returned.  I am in the tech industry and shortly after the iPod was launched I was in a meeting in Silicon Valley.  One of the guys in the meeting was a very smart individual who had just bought the gen 1 iPod.  I asked him what he thought of the product, and he launched himself into a speech full of superlatives.  He spoke not only about the product, but the entire experience, including “out of box”.  He spoke of the tiniest attention to detail.  I was struck by what this said about this otherwise unloved company, and made me think that maybe something really special was unfolding there.

    That caused me to take a closer look at the company, that had still not done much, even though Steve had been back for a while.  So in mid 2002, I decided to take the plunge.  That was pre-split and the stock was around $15.00, but the balance sheet had $12.00 or so in cash.  I made a small bet, thinking that the combination of Jobs, the Mac, and this new thing called the iPod was worth at least $3.00 per share.  I paid $15.11 which is a number I will never forget. I have held ever since.

    My only regret is that I decided to limit the size of my investment to a range I reserved for risky plays.  So it was about 1/2 to 1/3 what I would otherwise bet.  But then again, I have about a 53 bagger right now, so I can’t feel too bad about that choice.

    [ Edited: 18 September 2011 12:51 PM by Lstream ]      
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    Posted: 18 September 2011 02:13 PM #7

    Thanks, Mace, GalleyBob and LStream.

    I guess, like many of you, I am endlessly fascinated by this company.  I really appreciate your contributions, and am struck by the diversity of perspective:  Mace lured in by faith in Steve Jobs; LStream by the elegance and attention to detail of the iPod, and the insanely low valuation;; GalleyBob by OS X’s “game changing” potential.

    Also striking is the remarkable equanimity you all seem to have:  Regrets for not buying more, largely outweighed by gratitude for what you did buy.  I tend to agree.

    Don’t be shy, guys and gals.  Join the conversation:  When did you first buy AAPL, and what was your principal motivator?

    [ Edited: 18 September 2011 02:17 PM by Xtra ]

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    Posted: 18 September 2011 05:09 PM #8

    Spring 2007, iphone. I wanted one real bad and I figured everyone else would to. I did not expect to be an AAPL investor this long though. I was expecting the story to peak in 2011. Then last year they messed me up with the ipad and added more chapters to the story. Darn, they forced me to stay invested.  tongue laugh

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    Posted: 18 September 2011 05:34 PM #9

    I feel so, so sorry for you MB.  Being forced to stay invested in the best, fastest-growing company in the history of companies.  rolleyes  LOL

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  • Posted: 19 October 2011 04:52 PM #10

    I apologize in advance for the length of this account. Writing about my first investment in Apple turned into an accounting of all of my investing(primarily in Apple) over the last 15-20 years.

    My direction towards investing in Apple was set when, in 1987, my 17 year old son convinced my wife and I to consider buying a Macintosh SE(with the 9 inch screen) instead of the PC Clone we intended to buy. After watching a Mac SE demo from a co-worker (My wife and I worked at the same company) we bought an SE and since then it’s been only Apple computers(and iPods, iPhones) in our home. From before we were married in 1986 my wife and I had each put the maximum into our yearly IRAs and bought many different mutual funds from many different companies: T. Row Price, American Century, etc.  As the years went by we became very unhappy with the low performance of our IRAs and with our 401Ks. In fact, one year when wanted to fund our IRAs, we went with Money magazine’s top rated fund from the previous year. That fund turned our $2000 IRAs into $800 rather quickly. With the start of the Tech Boom, we put a great deal of our savings into several stocks that seemed to be very strong: Sun Microsystems, Ariba, Home Depot, Cisco, JDSU, Nokia and of course, Apple.  When theTech Crash came, we lost over $100,000. After several months licking our financial wounds I finally suggested to my wife that we consolidate the remnants of our investments into the stock of a company we were comfortable with and whose products we used, Apple. This decision was based solely on our experience with Apple computers and it established our future investing pattern.
    When Apple seemed to be stabilizing and establishing a positive direction, we moved all of our IRAs to one financial location, Charles Schwab, and converted all the mutual fund money into Apple stock. I then discovered that our company allowed employees over 50 to move 75% of their 401K into a self-managed Account. I did that ASAP, bought Apple and then lobbied my wife to do the same. She was OK about doing the self-managed account but balked at buying nothing but Apple with it. She put half into Apple and considered moving the rest into something “safer” like a Fidelity Fund.  Several months later, she relented, the second half went into Apple and we officially, in spite of all the cautions from experts, had all our eggs in one basket.
    By 2008-2009, when the subprime mortgage crisis, recession and Wall Street panic took Apple from just under $200 down to around $80, we had accumulated a little under 20,000 shares. Day by day as we watched the stock price slowly drop I was not smart enough to sell our IRA and 401K stock to prevent the steady decline of our investments. My unwavering faith in Apple prevented me from seeing that the economy was going to take down everything. If I was even smart enough to sell when the stock was around $160/share, I would have been smart enough to buy back close to $80/share when the stock finally bottomed out and started to recover.
    When I retired in 2008 I was able to roll over my 401K and use the other 25% of my 401K money to bump our Apple stock totals up to 24,003 shares which is where it is today. We have additional Apple shares in two other dedicated Charles Schwab accounts: 130 in a car fund and 515 in a home remodel fund but I don’t count them because they’ll be sold when needed. In December of 2010 we were able to pay off our mortgage, so now that my wife has joined me in retirement(at 55 years old), we are making due with our two monthly retirement checks and my monthly Social Security check. Except for the two dedicated accounts mentioned, we plan to continue to hold tight to our Apple shares for several more years, even though the periodic wild fluctuations are, at times, nerve wracking.  Our least expensive stock purchase was 485 shares that we purchased for $7.45/share on 12/22/00 and our most expensive purchase was 160 shares for $320.25/share that we bought on 12/10/10.

          These are the lucky choices we made over the past 25 years:
            1. Became Apple computer users in 1987
            2. Consolidated our Tech Crash remnants into Apple shares (~ 2003)
            3. Converted our IRA investments from many Mutual Funds to Apple shares (~ 2003)
            4. Used a self-managed portion(75%) of our 401K to buy Apple shares (~ 2004)
            5. Held long term

    I’m at this site daily to peruse the postings from it’s members and it helps me remain positive regarding Apple’s future. I’m occasionally tempted to get into options trading but that quickly passes when I remember that we’ve greatly benefited from luck as investors not skill as traders. As with most on this board, Steve Jobs passing was a very sad event for my wife and I. We’ve watched as his leadership and brilliance brought Apple to where it is today.  Until a few years ago, each January brought the excitement of Macworld Expo in San Francisco and the anticipation of “one more thing” from Steve. Apple has created amazing products that we use daily and Apple stock has provided us extraordinary financial security in retirement_far beyond anything we could have reasonably expected or imagined. And even after the stock’s drop after yesterday’s earnings, I’m very optimistic about Apple’s future.

         
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    Posted: 19 October 2011 05:25 PM #11

    Great story, lucky choices.  But smart choices too.

    I finally traded in my vanguard Ira moneys for aapl shares, 

    Good luck to all.

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    Posted: 19 October 2011 05:39 PM #12

    Luckychoices - 19 October 2011 07:52 PM

    ... With the start of the Tech Boom, we put a great deal of our savings into several stocks that seemed to be very strong: Sun Microsystems, Ariba, Home Depot, Cisco, JDSU, Nokia and of course, Apple.  When theTech Crash came, we lost over $100,000. After several months licking our financial wounds I finally suggested to my wife that we consolidate the remnants of our investments into the stock of a company we were comfortable with and whose products we used, Apple ... My unwavering faith in Apple prevented me from seeing that the economy was going to take down everything ... I’m occasionally tempted to get into options trading but that quickly passes when I remember that we’ve greatly benefited from luck as investors not skill as traders ... Apple has created amazing products that we use daily and Apple stock has provided us extraordinary financial security in retirement_far beyond anything we could have reasonably expected or imagined. And even after the stock’s drop after yesterday’s earnings, I’m very optimistic about Apple’s future.

    Congratulations for your lucky choices.  I’ve made similar decisions.  I like that thought “greatly benefited from luck as investors not skill as traders”.

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  • Posted: 19 October 2011 07:03 PM #13

    Xtra - 19 October 2011 08:25 PM

    Great story, lucky choices.  But smart choices too.

    I finally traded in my vanguard Ira moneys for aapl shares, 

    Good luck to all.

    Thanks, Xtra. It took us awhile but I finally suggested to my wife that we stop using a Credit Union or bank accounts and instead buy Apple stock with money that is being saved for a future use. That’s how we ended up with “New Car” stock and “Remodel” stock. We just celebrated our 25th wedding anniversary and, when her parents gave us $3000 against our strenuous objections, we bought 7 more shares of Apple for our “New Car” account. OK, it was at $419/share, but of course I had to buy before the anticipated move up after 4th Quarter earnings.  :-(

         
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    Posted: 19 October 2011 07:08 PM #14

    and that $419 will seem cheap in a could of years

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    Posted: 20 October 2011 02:57 AM #15

    Xtra - 19 October 2011 10:08 PM

    and that $419 will seem cheap in a could of years

    Amen to that!  Great stories.  Enjoyed reading them and wished I was a bit older and wiser and had been able to invest in stocks back when apple was a mere $15 stock!!  What a trip