Apple's Shares Are Now More Expensive Than Google's

[TheForce]

Apple stock seems to not be able to keep its gains.

This has been the history of Apple stock for quite some time. Once you understand the cycles and when they occur you can make some easy money using Apple as a stock that you trade around a core position. There are many strategies for making money in the stock market but Apple is a classic example of this one being the best way with a good margin of safety to make more money than just the age old strategy of buy and hold for dollar cost averaging as it continues to go up over the long haul.

Trading around a core position is where you buy in increments when the stock is in a dip, like now or yesterday, and sell a fractional amount of your total shares when the stock is on its frequent all time high like it was on April 9th. You never go all in at once and you never sell out at once. Trade commissions today are so low that this type of buy and sell is affordable. The company does not switch its profitability as frequently as the stock changes which means the company is solid but the stock is volatile and is used by the hedge funds to raise cash to cover their blunders. You and I can do the same except we aren't hedge funds so we use Apple to build a nice nest egg for our future. Note that this does require work so if you don't have the time to work at it on a daily basis, its best to not trade Apple but stick to simple investing, dollar cost averaging building the position. Soon you will also benefit with an income that you can reinvest as Apple has declared a small dividend too. Microsoft, IBM, and Intel are others that are excellent companies for long term that pay a dividend. I presently am not into these at this time. Google is only good for trading, IMO, because it has been flat for well over a year now. The company went flat when it decided to bail on the Chinese market.

 

[harshness]

Other than confusing the living daylights out of your cost basis, I see little point in trading Apple on a periodic basis.

Absent more than one dividend in their history, its one of those things that I would just buy low (almost always after a major product announcement) and sell high.

For my part, I bought the day that the iPhone 4S was announced and the stock value dropped over 10%. So far I'm up about 61%.

 

[Peter Parker]

Apple stock seems to not be able to keep its gains.

whenever a dtock hasa runup this fast you get an adjustment. In this case some of it is simply profit taking and some was nervousness about the run-up and whether this stock can sustain a P/E that is much higher than what would be caeed cometitors (HP, dell etc) Only time will tell whether Apple can sustain it but periodic adjustments are as likely to happen.

 

[TheForce]

Other than confusing the living daylights out of your cost basis, I see little point in trading Apple on a periodic basis.

If you try to track the cap gains for tax purposes yourself, you are correct. It becomes an accounting nightmare. I do it with 25 stocks and I'm no accountant. The trick is that the brokerage house like TD Ameritrade that I use does all the work for you. Plus, if you use TurboTax, and get the premium version you can have Ameritrade populate your return with all the data in a few seconds for the whole year. This has been possible for at least the 4 years I've been doing it.

As I stated, trading around a core position has the advantage of doing better than simple buy in and let it ride growth, but it requires work. If you don't care to work at it your plan is best suited for you. I need to generate growth at a time ( in my mid 60's) when most are afraid to and just want to stay conservative. I don't work for an employer or a client anymore so I have the time to work at this like a daily job. Therefore I expect to earn what would be a normal weekly paycheck at minimum. The problem with stocks that don't pay a dividend, is you must sell in order to generate income. Trading at proper times is the only way to do that but to also grow your nest egg you must also maintain a position, The strategy allows for a happy balance between the two.

Only time will tell whether Apple can sustain it but periodic adjustments are as likely to happen.

Yes, time will tell and I can almost guarantee you that someday, even Apple will fall to flatline growth. Maybe it will also suffer the fate of RIMM or AOL etc. Maybe just huge but no luster like Microsoft. The trick is to be in during the growth period, not wait on the sidelines for a time when you can look back on history and repeat that age old bit of hindsight wisdom- "I coulda, I shouda." Better to say, "I did."

I have a relative who sold his Apple stock 3 years ago and got into Red Hat when it was at $26. This is another one that is flying high. I'm also interested in Priceline.com and started a small position at the beginning of the year. While Facebook is going to be the story of 2012, I'm afraid the IPO is out of reach but I will be watching and looking for a different story than the other IPO's that fizzled recently.