The Worst Mistake You Can Make as an Investor

by Fred Fuld III

Do you know what the biggest mistake you can make as an investor? Selling too soon. Just because you have a great profit on a stock, doesn’t mean you should sell it, assuming you are a long term investor and not a trader.

I have many examples of selling too soon. Here are just a few.

When I was in the financial services industry many years ago, I was selling a lot of the Franklin Municipal Bond Funds and Franklin GNMA Funds to my clients.

I went to visit the Franklin Mutual Funds headquarters (the company was in its old building at the time, and is now called Franklin Templeton) to do some due diligence, and meet with the broker liaison at the company.

When I was given a tour of the place, I noticed that walls were being knocked down, four employees were sharing a small office designed for one person, and cables were literally being run down the hallways by installers right in front of me.

My first thought was “Wow, this company is growing like crazy. I should check and see if Franklin Resources (BEN) is publicly traded.” It was, on the Pink Sheets. (This was way before it was traded on the New York Stock Exchange.) I bought a couple hundred shares at about $7 per share, and it shortly rose to $8.

Also, at that time, I just bought a rental property. I thought at the time that I should probably sell the Franklin stock in case I needed the funds to do upgrades on the property, plus I had just made a 14% profit in a short period of time. I actually didn’t need the funds for the down payment since I bought the property for nothing down (that’s another story I will write about eventually).

Since then, the stock has had ten stock splits. If I had just kept the stock and forgot about it, my $1400 original investment would now be worth around $542,000.

I have another example. I had 100 shares of Boston Beer Company (SAM) that I held in the form of multiple certificates on one share each (another story). I had paid about $30 a share for the stock back in 2009.

The next year, it rose to $90 a share. I thought that tripling my money in such a short period was a pretty good return, actually a fantastic return, so I thought, why not take all these certificates in to my broker and liquidate them.

While I was in the brokerage firm and one of the representatives was preparing a receipt for me including making copies of every certificate, another representative came over and said “What the hell is with all these certificates?”

When he was making these rude comments, I seriously considered picking up my certificates, and leaving, but I didn’t, unfortunately. I wanted to take my profit. The stocks eventually traded over $1000 a share back in 2020 and 2021. The stock is now trading over $350 a share, still more than ten times my cost.

I could tell you one more story about Apple (AAPL) stock, but it would make you sick. It makes me sick even to think about it.

The point that I’m making is that the dollar amount of profit and the percentage amount of profit you have in a stock is irrelevant. If you believe in the company, there is no reason to sell it, unless you are very desperate for money. And if you are that desperate, see if you can get by with selling half.

Obviously, there’s a chance of holding on to losers, and not getting out soon enough. Maybe you lose $5,000 or $10,000 on a stock that goes to zero. But it’s the big long term winners that pay for all those losses, and still provide huge returns.

The best way to tell if you should sell a stock is to imagine that you didn’t own the stock but you have the money to buy it. Would you buy it now? If the answer is yes, hold on to the stock. If the answer is no, then maybe it is time to sell.

Disclosure: Author owns AAPL and SAM.

30 Years Ago, Kevin Costner Starred in ‘Ancient’ Apple Computer Ad: Wall Street Video of the Week

Does any one remember what a Lisa Computer was? Has anyone ever touched one? (I did, for a couple hours many years ago.) This was one of the first follies of Steve Jobs. Talk about a clunky, unattractive computer. Anyway, when Apple (AAPL), ran a Lisa television commercial long ago, guess who the star was? Kevin Costner, star of Field of Dreams, Dances With Wolves, Bull Durham, JFK, and many other movies.

Four Ways to Invest in Apple (without using options)

by Fred Fuld III

Are you bullish on Apple (AAPL)? Are you bearish on Apple? Do you know these are four securities you cn buy to participate in the movement of the Apple stock?

AAPL

First, you can just buy the stock outright. That’s Apple with the symbol AAPL. What you buy is what you get. When the stock moves up a dollar in price, your share move up one dollar.

AAPD

If you are bearish on Apple, and you don’t want to take the risk of shorting the stock, you can buy the Direxion Daily AAPL Bear 1X Shares (AAPD). This ETF has a goal of moving inversely to the price of Apple, on a dollar for dollar basis. In other words, if Apple moves down a dollar, then AAPD should move up about a dollar.

AAPU

If you are really bullish on Apple, you can consider trading the Direxion Daily AAPL Bull 1.5X Shares (AAPU), which is an ETF with a goal of moving one and a half times the direction of Apple. So if Apple moves up one dollar, AAPU should move up about $1.50.

AAPB

Now if you are super bullish on Apple, you might want to look at the GraniteShares 1.75x Long AAPL Daily ETF (AAPB), which attempt to provide 1.75 times the movement of Apple stock. Just remember, if Apple goes down, this ETF will drop by about 1.75 times.

Keep in mind that these Bullish Single Stock ETFs and Anti Stocks (Bearish Single Stock ETFs) should primarily be used for trading as opposed to investing, and can obviously carry a lot of risk.

Disclosure: Author owns AAPL.

Why Invest in Apple Stock When You Can Invest in Apple History

by Fred Fuld III

Have you ever thought about investing in tech history? Such as the history of Apple Inc. (AAPL)?

Well now you have your chance.

Alexander Historical Auctions is auctioning off a couple of early Apple collectibles including Apple Computer’s first trade sign.

Source: Alexander Historical Auctions

The sign is estimated at $100,000 to $200,000, with a start price of $50,000.

This was the very first sign used by Steve Jobs and Steve Wozniak to promote their Apple Computer start-up, and was displayed at the first trade shows Apple attended in 1976.

If this item is too rich for your blood, you might want to consider picking up Steve Wozniak’s first Apple Computer tool box.

Source: Alexander Historical Auctions

It even has the original LabelMaker label with Wozniak’s name on it.

The starting bid is $10,000, with an estimate of $20,000 to $30,000.

This is your chance to get unique, rare, one-of-a-kind Apple collectables.

Please note: This auction includes other items that some may find disturbing.

Disclosure: Author owns AAPL.

$677,196 for Steve Jobs Apple 1 Computer

RR Auction, a Boston, Massachusetts based auction house, recently sold an Apple 1 Computer prototype.

This very rare Apple (AAPL) technology collectable was hammered at $677,196.

The name of the winner was no disclosed, but he is from the San Francisco Bay Area.s

In 1976, Steve Jobs showed the prototype to the owner of The Byte Shop in Mountain View, California

How to Invest in Apple Without Buying Apple Stock Plus Get Free Diversification

by Fred Fuld III

Apple (AAPL) has dropped about 18.7% from its high over the last several months. If you think the stock has bottomed out, and may be on the rise, there is an alternative to just buying the stock outright.

No, I’m not talking about stock options. What I’m referring to is Warren Buffett’s Berkshire Hathaway (BRK-A) (BRK-B). Do you realize that Apple makes up 47.6% of the Berkshire Hathaway portfolio?

So if you buy Berkshire, that means that almost half your funds are indirectly invested in Apple.

So what else do you get when you buy Berkshire, besides Warren Buffett’s expertise?

Here are some of the other stocks that make up a large portion of the portfolio:

Bank of America (BAC) 13.5%

American Express (AXP) 7.5%

Coca-Cola (KO) 7.2%

Kraft Heinz (KHC) 3.5%

Moodys (MCO) 2.9%

There are actually over 40 stocks in the Berkshire Hathaway portfolio, spread out over a lot of different industries, so it is well diversified.

I’m not recommending Berkshire as an investment because I think the bear market will continue (and I never make any stock recommendations anyway), but if you are bullish on Apple and you don’t mind a little stock market diversification, you might want to take a look at Berkshire, if not now then at some point when you believe the market has bottomed out.

 

Disclosure: Author owns AAPL and KO.

Apple Expected to Announce iPhone 13 Next Week

by Fred Fuld III

Apple (AAPL) will be holding it annual fall event on September 14 online due to the pandemic. It is expected to announce the release of its iPhone 13.

The big news about the iPhone 13 is that it will have satellite communications, which should work for emergency services, even if you are out of the cell phone range.

The iPhone is also expected to provide an improved camera which would allow auto-focusing with the ultra wide lens. In addition, it should allow the subject to be in focus and make the background blurred, if desired.

One other benefit would be the faster display refresh rates.

The stock is making all-time highs as I write this, reaching 157.26 per share.

 

Disclosure: Author owns AAPL.

Warren Buffett Sold 750,000 Shares of Apple, But It’s Still His Largest Holding

by Fred Fuld III

Famous investor and multi-billionaire Warren Buffett has sold over 750,000 shares of Apple (AAPL) during the latest reported quarter, however it is still the largest holding in his Berkshire Hathaway (BRKA) (BRKB) stock portfolio.

As a matter of fact, Apple makes up 26% of the Berkshire portfolio. He probably didn’t want to get too overweighted in the stock. He first started buying Apple shares near the beginning of 2016 at an average cost of about 150 per share.

Buffett also dumped shares of another stock, Wells Fargo (WFC). He liquidated over 31 million shares of the company, so now the stock makes up less than 9% of the Berkshire portfolio.

The Oracle of Omaha made no changes to the second and third largest holdings, Bank of America (BAC), and Coca-Cola (KO). Same with the fifth largest, American Express (AXP).

It is interesting to note that the above five mentioned stocks make up over 65% of the total Berkshire Hathaway stock portfolio.

If you want to see a list of all the stocks in Warren Buffett’s Berkshire Hathaway stock portfolio, you can go to the following link:

Warren Buffett Berkshire Hathaway Stocks

 

Disclosure: Author owns AAPL, BRKB, BAC, & KO.

 

Report on the Apple Annual Meeting

by Fred Fuld III

Last Friday, I attended the Apple (AAPL) Annual Meeting, held in the Steve Jobs Theater by the Apple headquarters in Cupertino, California.

All directors were approved, and other proposals with a recommendation of FOR passed, and recommendations AGAINST did not pass, with a lot of discussion about Proposal 5, True Diversity Board Policy.

After the formal part of the meeting, Tim Cook came out to speak and answer questions. He started out by saying that in 2018, revenues were $262 billion, a $22 billion or 9% increase over the previous year. Growth took place in all categories and regions, with a 1.4 billion installed base now.

iPhone

The iPhone has a 900 million installed base worldwide with revenues of $155 billion. The iPhone XR is the most popular, with the liquid retina display and the A12 biochip. It has the longest battery life of any of the phones. It has a customer satisfaction rating of 99%. Apple is “working on the last one percent.”

Service

The services business had $31 billion in revenues. They expect it to double by 2020.

App Store

The app store is doing well. $120 billion has been paid to developers. Amazing since in 2008, this market didn’t even exist.

Apple Pay

Apple Pay is in 29 markets, with a doubling of usage, and 350 million subscriptions. A new iPad is being released this month. It measures 9.7 inches, with a target audience of the education market. It is priced at $299. There are two new models of the iPad Pro.

The Mac has had an all-time record year.

Wearables

The wearables, which includes the Apple Watch and the AirPods, grew 50% last year.

Investments

$14 billion was spent on R&D last year, and 18 companies were purchased.

Apple is investing across the US, spending $1 billion in Austin, Texas for more work space, along with Culver City, Portland, San Diego, New York, and Pittsburgh.

Dividends

The company is committed to increasing dividends annually, and they are currently double what they were when they first started paying.

Values

They are now using 100% renewable energy around the world.

The company is partnering with Malala Fund, which seeks to secure education for girls around the world. It is also involved with the Everyone Can Code curriculum for students beginning in 3rd grade for kids to easily learn coding. The curriculum is also being accepted in community colleges. The company is also involved with the Everyone Can Create program , which integrates creativity with math and science.

Health

Cook sees the health area as a major opportunity for growth. The company is working with the Veteran’s Administration to get patient records on the iPhone. The Apple Watch is expanding its use in wellness and health.

Apple’s goal is to have all future products use recycled substances.

Tim Cook

Tim Cook’s final comments about hiring, politics, and privacy:

Apple hires based on “skills, capabilities, and contributions”

“We’re capitalists”

“We believe in privacy”

No PACs

“We don’t donate one penny to political campaigns”

“Privacy is the most important issue of the century. We view it as a human right.”

“I’m a free market guy but we’re going for regulation” regarding privacy

“Everyone should have dual factor authentication”