Friday, September 16, 2016

Should I Have Gone Apple Picking?

Fall is just around the corner. With this time of year comes apple picking at the orchards, warm apple pies, and spiced(or spiked) apple cider.  Ah it's a great time to feel incoming arctic air, the fading strong sun still on your skin, and nature's beautiful color. I can almost feel it now.

It's no secret Apple(AAPL) is one of the most widely followed companies not only in the investment community, but worldwide by customers, competitors, and hater's alike. It only makes sense then that The Long Haul Investor also keeps an eye on the company too.

I was looking at Apple just before it was announced Warren Buffet's Berkshire Hathaway(BRK.A) took a position.  Of course that gave the shares a nice little pop.  It also made me feel kind of cool to think I was looking at the same company thinking it was a decent value just as some of the richest and smartest investors in the world were too.

When shares were in the $90's there was a lot to like. The stock had
a P/E of around 10-11, each share had $43 in cash to it's name on a solid balance sheet, a 2.5% dividend yield with buybacks as tailwind, and a bottom line that's been a fat and healthy 20%+ for the last few years and then some.  Not to mention you get the amazing brand recognition the company has built for itself. Plus the stickiness of their entire ecosystem with the I-phone and I-pad as cornerstones.

That's just the tip of the iceberg. Of course there are plenty of downsides I could think of including their recent EU tax scandal/shakedown, or you can read all of managements concerns in their most recent annual report. But I don't like to slam something unnecessarily. The fact is the company is well run, and despite some people claiming the new I-Phone is lackluster I don't think it changes much for the company right now. Apple has plenty of loyal customers, and reliable hardware and software that works well together.

Fact is the stock is still a relative value right now so I could theoretically still buy shares and have upside.  Although I'd probably wait for a pullback to the $105 area at the very least.

Did I miss out on a great investment opportunity? I know I already missed out on a rougly 25% gain if I had bought in May or June when the stock was in the low $90's. Most people are hard pressed to make that in a couple years, let a lone a single summer. I don't know maybe I should have. I'm sure a lot of other "smart money" bought shares beside Warren Buffet. 

Eventually I decided to not make a purchase.  For one I don't like tech a whole lot, even though I think Apple is one of the few tech companies investors can safely park their money for the long haul. I could have bought some options a few months out and made a trade out of the opportunity, but I didn't.  In hindsight I really should have done that at least. But I could second guess myself all day about a ton of things and get nowhere.

I think this quandary just highlights how difficult it can be to make a choice with our hard earned money no matter how tempting the numbers look. Hitting the buy or sell button is not always an easy task. Although for some it comes far to easy, and often to their detriment.  I'll stash this article away as food for thought this fall.

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