Sunday, April 25, 2010

Why I own Apple

There's a story behind every stock I own. Let me talk about Apple (AAPL). It closed at $270/share on Friday, putting me up over 150% in this stock. I have been drinking the Apple Kool-Aid since the early 90s. If there is any stock I have a emotional connection to, it's Apple. I bought Apple originally because I believed in the products. I own several of them, I've always felt the Mac OS was superior to Windows. Steve Jobs is awesome, having put his footprint on computers, music, movies, cell phones and now tablet computers. What I realized early that a lot of the big boys didn't is that the secret sauce is the iTunes Music store distribution model. Just like when they rolled into MP3 players, there were other players on the market in 1999, but none had an easy way of getting your content onto your computer. When they rolled int cell phones, everyone hated their phones, the cell makes and the service providers knew this, but did nothing to make better phones. They left money on the table and Apple's been scooping it up. They leveraged the iPhone Apps into the iPad. I hope that at some point in the future they put forward and backward facing cameras on it. That's when the whole netbook market will implode.
Back when it was $4/share I owned a bit, sold it at about $100/share and made out nice. Wish I had bought a ton more, but again, the goal of investing is to be able to sleep at night. If you can't sleep, you are investing money you can't afford to lose. Sell something. The challenge I have with Apple is when do I sell? They just announced earnings that blew out estimates and the iPad has got a huge future. How high do I think the stock will go? No clue. Will I sell if it hits $300/share? Probably not. At some point, I will sell my initial investment so I'm playing with "house money". I guess I'm saying the estimates of the stock price by the "experts" don't mean much to me. I will sell when I don't think, based on the market conditions, the upside is as big a risk as the downside.

Anyway, why did I buy Apple? I know the product, I see the potential and they have momentum. Is it too late to buy Apple? I don't think so. I think it will pass $300/share this summer. Just my opinion. You decide for yourself.

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