Wednesday, January 16, 2013

Letting Go of a Stock You Love

One of the hardest things in investing is knowing when to walk away.  Especially when you're making money. Remember, a gain isn't a gain til you cash out. What was worth $50 yesterday can be worth $.50 today. I'm wrestling with this because my biggest and best performing stock has been getting trashed for about 6 months now. Apple once hit $700/share and is now around $500/share.  My purchase prices range from $100 to $385 so I'm still up, just not as up as I was a few months ago.

Why do I think Apple's been down when they're still selling iPhones, iPads, iPods & Macs like crazy?  Not to sound like a broken record, but a lot has to do with analyst's published expectations, which have been and continue to be all over the place. In addition, Steve Jobs has been gone over a year and no one believes Apple can still innovate. Apple has gotten trashed the last 2-3 days because someone reported that Apple reduced it's orders for replacement parts for the iPhone 5, and someone made the logical leap that this means the current "Jesus Phone" isn't selling as well as previous versions.  But at the end of the day, no one's opinion of Apple really matters but mine, since I'm the one holding the bag.

As I type this on my MacBook Pro and listen to BBC Business Daily on my iPhone, my perception of the company hasn't changed in any negative way in the last 20 years. I remember when the stock was selling at $4/share and everyone was just waiting for the doors to closed. I remember when people thought the company's name was really "Beleaguered Apple" because that's what it was called in every article written.  I remember when I had the pleasure to meet Steve Jobs at the Boston Macworld Expo on 1997.  I remember when Microsoft invested $150 million just to keep Apple on life support so the Department of Justice wouldn't call them a Monopoly.  I remember my SE/30, upgrading the chip in my PowerMac 7500 myself, Systems 7, 8 & 9, the clones, the first iMac, the switch to Intel. I remember my user group and trying to tell my Windows-using family and friends that the Mac was a better machine. And I remember then politely tolerating me.

My point is, there are very few people who have loved a company more than I have loved Apple over the years. And Apple has loved me, not just with great products, but with a great return in the stock price.  But what trumps all this love is the fact that my goal for buying Apple stock was not to show them  love or to get the annual report. My goal for buying Apple and every stock I've owned is to get a return. To make money.  Unemotional money. Period.  To do so, the stock has to rise. And it has.  But I cannot forget that the most important factor in the continued rise of the stock is OTHER PEOPLE'S PERCEPTIONS of the future of the company. And people are not logical.  And they have short memories.

Blah, blah, blah.

Here's the bottom line. While I still love Apple, I don't think it's stock will rise over the next few months as high as some other stocks I may be able to find. I'm not saying it won't rise, I'm saying from a pure percent increase perspective, there may be better opportunities out there. At least right now.  I'm not going to sell it all, because it just might rise and I want to be in on that.  But I am going to take some money off the table.

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