Buy Apple Stock (50 Shares) On 12/23/2013

I decided to buy 50 shares of Apple stock before the market opened this morning after both companies (China Mobile & Apple) officially announced they finally have a deal. I got the shares at a price of 567.88.

Update: These shares split 7 to 1 on 6/9/2014 so I now own 350 shares at a purchase price of $81.12. If you want to know my more current opinion of the stock after the split, please read this: should I buy Apple stock.

Update #2: I bought 150 more shares of AAPL on 8/12/2014 at a price of $95.90. That makes my cost basis for all 500 shares $85.60.

It has been a long time coming with months of speculation and rumors but now we know the deal is real. What we don’t know are any of the pricing details as only the January 17, 2014 date was given as the start date when the iPhone would go on sale.

Apple stock has been on a roller coaster all year and is now finally back to about even which means it has underperformed the rest of the market. It seems this company gets more press than any other company in history as everyone has an opinion why it will crash and burn or go back to $700 a share and beyond. 

Why I Bought Apple Stock

These are my thoughts on Apple and they are listed in no particular order:

1) China Mobile deal – Regardless of the iPhones pricing and subsidies, I think Apple stands to benefit more than many “experts” believe. Especially long term, this deal was a must for Apple as they now have exposure to hundreds of millions of Chinese who are status oriented and love technology. 

I believe over time, Apple will do very well in China even though many in that country might not be able to afford an iPhone right now. There has been so much speculation about how the iPhone is priced too high to do well but I have a sneaking suspicion that as in Japan, Apple iPhones will do very well.  

2) I bought one of the iPad Airs and love it. Almost all accounts have the new updated Apple products selling very well across the board and I think this Christmas season will show demand is very strong for their products. 

3)  I like the new strategy with the 5C iPhone. It may not have sold too well at the start but Apple now always has two brand new phones to sell anyone who walks in their store. Before they just had one. This strategy of repackaging the old model and giving it a new look is brilliant and I believe will serve them well in the long run. 

4) The iPhone 6 will have a bigger screen according to most advance reports. If true, and I believe this will happen, Apple will take some high end market share away from Samsung. Many people do seem to like a bigger screen and right now Samsung is the only place to go to get it at the high end.

My wife is waiting for the iPhone 6 hoping it has that big screen and if it does, she will buy one. Apple understands that when a product size has proven to be successful (think iPad Mini) they need to jump on board. 

5) The very safe dividend of more than 2% will probably go up early next year. 

6) Apple continues to buy back shares and it is unlikely that will slow down. They may not announce an increase like Carl Icaan wants but they are already buying back enough to make me happy. 

7) 2014 will surely be the year of at least one completely new Apple product. This is speculation but we know they have been working on some sort of iWatch or iBand and the iTV rumors persist as well. Tim Cook sent a memo to employees just the other day recapping 2013 and wishing them happy holidays. In the last paragraph was this line and I take him for his word:

We have a lot to look forward to in 2014, including some big plans that we think customers are going to love.

8) I love their idea to give away their OS X Mavericks software (along with a few other select programs) for free. This is a direct attack on Microsoft and over time could slowly start to introduce potential customers to the Apple ecosystem.

9) iBeacon – not a whole lot has been written about this technology that is already in more than 200 million iPhones. It involves Bluetooth Low Energy and it seems to be something that could lead to implementing and iWallet or reliable payment method right through your phone. The fingerprint sensor on the 5S’s was a step to lock down each iPhone and make them more secure and a payment system and exciting advertising options might develop with iBeacon. You can read more about it here

Should You Buy Apple Stock?

You might be wondering whether you should buy Apple stock and you need to know that they have a lot of detractors who disagree with me and say that the company only has a few products to hang its hat on and requires constant innovation to prosper. Earlier in the year the stock bottomed out at about $390 and at that time everyone seemed to be bashing the company for not innovating and having no clear path. Some people still have that opinion.

I just don’t think those people understand the long term strategy Apple is taking as they set the stage for a many year run of solidifying their ecosystem and bringing first time buyers into the fold to use their superior products. Their strategy of giving away software, having at least two new phones at all times, as well as their stellar balance sheet that is flush with cash makes me believe this is a good long term holding.

While I of course wish I had bought the stock at that lower level, now we have the situation where a lot of the short term questions have been answered and we can see Apple’s complete line of updated products. I believe much of the risk has been taken out of owning the stock.

I also find it unlikely they would build a new $5 billion dollar headquarters without a very healthy pipeline of products and ideas that will last for many years to come.

Please check out the list of all my stock buys and sells to see what else I own in my $150,000 portfolio and go to my “Start Here” page if you would like to get a better idea of what this website is about. 

   

8 Responses to “Buy Apple Stock (50 Shares) On 12/23/2013”

  1. Alfonso says:

    HI Bruce,
    I am new learning how the stock market works, would you recommend me a demo to practice my skills before I go out there to the real world?

    Thanks.

    • Bruce Alan says:

      Alfonso,
      You can sign up for a free account at Wall Street Survivor which has a stock simulator where you can practice buying and selling stocks on a system very similar to the real thing. You will get some virtual dollars with which to trade and again, it is free.

  2. Peter says:

    Hey Bruce,

    would you sell your apple shares before they go below 85? I am holding about 1K avg $85/share, and start losing patience here.

    Not seeking advice just want to know what you think of future of APPL?

    Thanks

    Peter

    • Bruce Alan says:

      Peter,
      You should do what you feel comfortable doing. Selling now with a gain is never bad if that is what makes you sleep well at night. Personally, I will not be selling even though I fear AAPL may be dead money for over a year. It has a rock solid dividend and is the number one brand in the world with an extremely loyal customer base. But it may take until the iPhone 8 in 2017 that is rumored to be made of glass for things to really get back on track. The company still does and will continue to make tons of money and for me, I am happy just holding it but others may disagree.

  3. Dave says:

    Hi Bruce,
    I following you from some months right now, and i wish to thank you for yuor advise. I’m really new about investments so i really appreciated many of your tips.
    My portfolio is composed in large part of AAPL stock, do you think the time is right to sell this stock because it has reached a new hight? maybe sell now and rebuy on the pullback ?
    Thanks for your advise.
    Dave

    • Bruce Alan says:

      Dave,
      “the pullback”?
      What pullback is that? Do you know there will be a pullback? What price will that pullback be to? Will you really buy back again at some predetermined price if it ever gets there? If you sell you will have to pay tax on that gain.

      As a new investor, I see you wanting to do the “sell and buy back thing”. It is hard to resist that urge I know. But that is trying to time a stock and well, that is usually/often a losing strategy because you can’t see the future.

      Now, if you feel uncomfortable with the number of shares you have and are happy with the gain, that is a completely different story. Always sleep well at night and if you are not because you are overweight in Apple and want to lock in that gain, then sell all or sell half of your shares. But selling (and paying the taxes) and then hoping to buy back later is usually a losing strategy.

      I will not be selling anytime this year. Next year I will evaluate as it goes by but this next quarter should/will be Apple’s biggest ever and I think the stock will go up more. I also think Apple is still technically cheap and they have great management that is systematically building an ecosystem that will dominate for years. (but remember, that is just my opinion and I can always be wrong and even if I am right it doesn’t necessarily mean the stock will go up!)

  4. Max says:

    Hi Bruce – In your video, the bid price shows 567.13$, AAPL historical quote ranges from 70-100$

    What is the difference?

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