I ran across this writing today and thought the relationship was amusing:
Back in February, when Apple's stock hit $500 the same price as an iPad -- we asked which was the better buy. Most experts said the company's stock was headed higher and they were proved right.
Investors who bought a single share of Apple (AAPL) back then would have earned $200. An iPad purchased in February, meanwhile, is now worth around $400 on the resale market.
Today, a share of Apple is worth about $700 -- enough to buy an iPad and an iPhone (with a two-year contract). Surely, we thought, the gadgets were now the better deal? But when we put the question back to the experts, many said that it still makes more sense to buy Apple stock than visit the Apple store.
Even with the stock at a record high, most have not lost faith in Apple's growth story. I would still buy Apple stock.
But- Don doesn't like having to make choices like this. What tech geek would ever accept a piece of paper representing 1 share of Apple stock in place of all the fun I can have with an ipad3? Not me. I prefer having my Apple and eat it too!
There are several options to achieve this-
Planning to buy a an ipad after the release, the feast can be better done this way- Take $4500 out of your savings account earning .05% interest or borrow money on your high interest CC at $18% interest ( 1.5% per month ) and buy 10 shares Apple stock, mid January. When the stock hit $525 a month later sell 8 shares back and pay off the CC or put the money back in your savings account, but use the stock gain of $500 to buy your ipad for free! saving and keep the remaining share for the growth. Then by September, your share of Apple can be sold for a profit of $250. Or even better just pay the interest on the CC at 4500 x 1.5% x 8 months or $540. The 9 shares of Apple is worth $6300 - 4500 -540 = $1260 profit.
If you don't mind even more risk of losing a small amount of money to achieve this, you can also buy call options and with much less money at risk you can achieve the profit differential, but since the odds of high success rate of Apple as a growth company, the risk is pretty high as in amount of money invested in the "deep in the money" call options. Personally, I don't play this game.
Note- the math here is not precise but the market for Apple is not precise. You need to make the buy and sell when the math works for your particular costs and needs. What you have going for you is the fact that the Stock offers plenty of volatility and excellent prospects for growth. Then when to trade to make the math come out just right depends on your ability to follow it and have guts of steel patience. If you don't have the patience nor time to execute a plan, then just decide, ipad or share of stock.
Back in February, when Apple's stock hit $500 the same price as an iPad -- we asked which was the better buy. Most experts said the company's stock was headed higher and they were proved right.
Investors who bought a single share of Apple (AAPL) back then would have earned $200. An iPad purchased in February, meanwhile, is now worth around $400 on the resale market.
Today, a share of Apple is worth about $700 -- enough to buy an iPad and an iPhone (with a two-year contract). Surely, we thought, the gadgets were now the better deal? But when we put the question back to the experts, many said that it still makes more sense to buy Apple stock than visit the Apple store.
Even with the stock at a record high, most have not lost faith in Apple's growth story. I would still buy Apple stock.
But- Don doesn't like having to make choices like this. What tech geek would ever accept a piece of paper representing 1 share of Apple stock in place of all the fun I can have with an ipad3? Not me. I prefer having my Apple and eat it too!
There are several options to achieve this-
Planning to buy a an ipad after the release, the feast can be better done this way- Take $4500 out of your savings account earning .05% interest or borrow money on your high interest CC at $18% interest ( 1.5% per month ) and buy 10 shares Apple stock, mid January. When the stock hit $525 a month later sell 8 shares back and pay off the CC or put the money back in your savings account, but use the stock gain of $500 to buy your ipad for free! saving and keep the remaining share for the growth. Then by September, your share of Apple can be sold for a profit of $250. Or even better just pay the interest on the CC at 4500 x 1.5% x 8 months or $540. The 9 shares of Apple is worth $6300 - 4500 -540 = $1260 profit.
If you don't mind even more risk of losing a small amount of money to achieve this, you can also buy call options and with much less money at risk you can achieve the profit differential, but since the odds of high success rate of Apple as a growth company, the risk is pretty high as in amount of money invested in the "deep in the money" call options. Personally, I don't play this game.
Note- the math here is not precise but the market for Apple is not precise. You need to make the buy and sell when the math works for your particular costs and needs. What you have going for you is the fact that the Stock offers plenty of volatility and excellent prospects for growth. Then when to trade to make the math come out just right depends on your ability to follow it and have guts of steel patience. If you don't have the patience nor time to execute a plan, then just decide, ipad or share of stock.
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