It is possible that you and TM are correct in selling. I am holding every stock I own at this point. IF TM's thinking is right, I will obviously be in deep kaka. I am by nature more optimistic (except in 2008) so only time will tell what is going to happen. I hope that if TM is right, I see strong signs early enough to sell my AAPL while I still have good profits.
In my case, all I did was what I said I was going to do.....with aapl.....I think it is a great company and have said so many times......It just seems to rack it up either up or down daily, but with an upward trajectory... For me, this month is just not the month to be thinking for a longer term, so if I am lucky enough to have a very quick gain, i`m taking it........I don`t think you are making a mistake to ignore these daily swings, as you have some `fat`....Apple`s fan base is exploding, as you noticed when you were in the `mall`....I sure wish you all the luck----we retirees have to stick together Tony
I'm not optomistic, I'm just saying earnings are starting to look better to me and I'll bet they turn out better than most are expecting. I d'ont think there is a real global banking problem. I think there is a serious Euro problem. Had Europe still had all their independent currencies the countries in trouble would do exactly what the US is doing, just at higher rates. But they are now tied to the ECB, who never foresaw the debt issues and the politics of it all and how strong members/currencies would balk at helping the weaker economies. When I used to travel to Amsterdam regularly in the 90's some of the Dutch financial pros in my company hated the one currency concept because the Guilder was so strong and they were afraid it would paralyze weaker governments/economies that needed to act in bad times. They turned out dead right. But Europe was in great shape back then and folks shaping the one currency movement were in euphoria and had eyes on becoming the world standard over the dollar. This was despite the fact that nearly every European I ever met was most interested in who would win the next Presidential election of the day or who would control Congress in the off years. We got a good taste of how paralyzing it all can be with the debt ceiling issues here. Nevertheless we are one country/one currency so its stupid politics in just one place that has to be overcome. The ECB has no choice ultimately but to bail out the PIGS because the strong economy exports of Germany, Holland and others will get so seriously damaged if they d'ont. Their only other choice is to dissolve the Euro literally overnight and give up on it being the prime currency of the world and let the PIGS solve their own mess. The Euro never had the chance to be the global standard anyway. But IMO we'd have no banking problem if we had no Euro. So the ultimate place to deal with financial banking problems in Europe is to decide on the fate of the Euro or realize that if it is to be kept in place than lending and lending is on the table literally forever.
It's not just Apple. Look at Bed, Bath and Beyond, McDonalds, utility companies and others. The real strong companies are at or near all time highs even though the market is down 10-15%. They have a way of finding their way to the top and when the market gets back to 12,500 they will be well above where they were when the market was at 12,500 a few months ago. Quality companies, super strong Balance Sheets and quality earnings that grow every year. You just have to sort them out.
I'm not optomistic, I'm just saying earnings are starting to look better to me and I'll bet they turn out better than most are expecting. I d'ont think there is a real global banking problem.
Well, get ready for a volatile day, unlike any you've seen for a while. As far as earnings, I think they will be very mixed, and not all of them will be better than expected... there will be plenty of disappointing earnings reports, and lowered guidance. Regarding banking, Citi, and others are international banks, so I disagree with you, and banks overseas have their share of troubles, and I do think the situation will be globally interactive, and will have global consequences.
Generally, I would sum it up to say that I do believe we are treading in an economic slowdown on a global scale.
That doesn't mean economies stop altogether... commerce will and must continue... but things will be dicey.
The market will offer opportunities to cherry pick... in fact, I just bought some stocks during pre-market that seem waaaay too low.
I am with you on this market. Even gold was in the toilet this morning down $73. What are people putting their money in. Too much of it to put in a jar or even a safe. I haven't sold anything or bought anything. Kind of frozen like a deer in the headlights.
Because the market approached the support levels and did not go under them... so it signals to me that it's time to buy... but carefully, because if the support breaks, then it won't be time to buy again until the next support level.
Also, the market appeared to be in a state of panic, IMO... and that can be a time to buy.
Little by little very nice positions can be built with attractive costs per share.
I bought and sold AAPL (as well as AMZN and XOM) several times today, but held 500 shares at $398.
Also, you must consider that I timed this event very well, by completely selling out of the market yesterday, so I avoided all the bleeding today, and was in a position to cherry pick.
On a more speculative and risky note, I also bought and held onto 30,000 shares of Sprint, priced less than $3 / share.
All that said, there is still SERIOUS risk going forward, although the last few minutes of today's session were slightly encouraging.
Charlie----I re-joined the apple crowd today.....I purchased it in an account that I don`t trade, so I will be holding through the up`s and downs.....Right now the cost is four hundred three , so there is a loss, which I would suspect will vanish tomorrow......If it doesn`t I`l just hang around and over time I agree with you all that it will trend higher......I agree with jflix that it is just so cheap......All I can think of it is classified as a` retailer`....and what RETAILER IT IS..
I just can not figure out why in three days the Dow is off say eight hundred points....Maybe not that much or maybe more.....If you and the rest of the gang decid `why` please let me know Tony
In my family, so far, we've purchased 4 iPhones, 5 iPods, and 2 MacBook Pros. The kids have purchased thousands of songs from iTunes, and in addition, my business uses a number of high-end Macs (for graphics). That said, I personally still prefer my HTC EVO 4G cellphone by a wide margin. However, I am looking forward to the possibility of getting the iPhone5 in a couple of weeks, and also the iPad3, when it is finally released, if it has a USB connection. Also, my wife wants a MacBook Pro of her own, and I might get an iMac one of these days. So, there's no doubt that we're doing our share of supporting Apple around here, as well as my ownership of AAPL shares!
To answer your question, the problem has been Europe mostly... they've got serious problems... and China is slowing down... as well as the Fed's action (seen as inaffective and wasteful) & language, which was pessimistic. Also, the jobs numbers were worse than expected. Add it all up and combine it with the increasing sentiment that we are in (or headed towards) a recession.
And add the news that the government MAY shut down again. And, of course, don't forget "the machines" and their HFT.
Everything has hit at once... like the perfect storm. And all the talk of a global economic meltdown doesn't help to motivate investors.
I think you will be very glad about your purchase of AAPL shares. I suggest that if AAPL shares take a hit, that you buy more on significant dips, which are rare buying opportunities.
I got off pretty lucky today. The equities in my trading acct. only went down 1.4% on this very bad day. Still holding a lot of cash. I have really backed off on trading so much, but markets like this tend to make you a day trader !!
I did buy Wal Mart (WMT) late in the day. It just seems so darn cheap I couldn't resist. I was flying high last week but the last 2 days put me down a couple of grand in my trading acct. for the year...
I used to own WMT, but after the early years of the big surge it seems it never has a whole lot of upside any more. And, it seems to me that competition is getting stronger all the time. Good luck with it.
Sounds like you avoided a lot of bleeding today. That's fortunate. Also, because you are a smart investor/trader.
You'll be in a much better position by year's end, IMO. I think we will see a better market by then. I posted quite a ways back that November was the time the market would improve, and I haven't changed my mind.
However, political problems (Obama) could change things.
Nice job TM! I am seriously thinking about wiring some money into my E-Trade account and buying more AAPL on the nice dip. I know that the rules state one should be diversified, but all rules are made to be broken .
There is not way I can trade as you do. I am much more of a longer term trader.
Thanks for the input Tag.....I guess the market turmoil is right on schedule, and for the believers we are getting close to the point of making buying decisions for next Spring`s sales ? Tony
At your own risk of course, I see it as a huge opportunity. The stock is at its 52-week low... down about 45% this year!! This is one of the most important technology companies in the world.
I now own HPQ shares. Take a serious look. Jump in or ease into it carefully... your choice... but this could be one of those very rare opportunities, especially if you are able to take a long-term view.
It just gets better and better for Apple.The stock IMO is more undervalued than ever with the notion of employees getting greater and greater clearance to use what they want at the office as per the article below. I've moved my expectations up to $575-600 now in the next year. Once again I think Apple is in its own investment class.
IMO - HP is a risk even at these prices. I'd be in and out on any jump because I doubt the company can hold it. On a fall I'd get out fast. Personally I think HP needed someone a lot more creative than Whitman as a CEO.
Once again, thanks for this awesome information. I have been hearing the same thing just by watching CNBC, etc. More and more workers are bringing their iPads to work to be more productive.
I totally agree that AAPL is in its own investment class. As I have stated on several occasions the past month or two, owning AAPL is better than owning gold. I think the wire transfer will be complete in the next hour or so and I am going to buy more AAPL shares unless it is already much higher for the day by then.
EDIT: Btw, should we be worried at all about all the lawsuits against AAPL on infringements rights?
When analyzing AAPL's financial data, and take into consideration all its cash, the stock is dirt cheap at its current levels.
Then consider that Apple products have still only touched the surface on a global level. In order to conquer the world, AAPL will likely develop a less costly iPhone and iPad so that they are more affordable in areas where they would otherwise be too expensive.
I bought a couple hundred shares of HPQ at $22 this morning. I like Meg Whitman. I think she may be what they need. They are at a 6 year low this morning. They are improving their laptops. If they can get their customer support straightened out. IMO they still build the best printers for the money. Its all a gamble.
I bought a couple hundred shares of HPQ at $22 this morning. I like Meg Whitman. I think she may be what they need. They are at a 6 year low this morning. They are improving their laptops. If they can get their customer support straightened out. IMO they still build the best printers for the money. Its all a gamble.
You are a smart fellow. I am convinced that this huge and important global company is now taking the bull by the horns to get itself on track. It is amazing to me that it had done as well as it did with its pitiful leadership.
With Meg at the helm, and with a renewed energy within the firm, I can see an improved Hewlett-Packard within a few years. I bought and sold the stock, back and forth, several times today, and owned thousands of shares at one point, but at the close of today's session I have kept 500 shares @ $21.74.
I think you and I will be glad we bought HPQ today. If the share price declines, and it certainly could, I expect I would buy more, lowering my average cost per share, and then flip the extra shares on the movement upswing, in order to maintain the same number of shares (but at a lower cost). Because of the price I acquired the shares, my 500 shares I own so far is up 2.65% today, even though the stock closed down 2.11%. That's a good position to be in, IMO.
Did you buy those shares of Sprint you posted about?
My 30,000 shares , which I own at $2.99, closed up a little today... closing at $3.18, after hitting a high of $3.24. The stock closed up 5.64%, and my position is up 6.21%.
I don't think it's too late to buy, especially if the stock dips again... and Sprint has a history of major price swings, and it is now fairly cheap, and it is close to its 52-week low, so it is a big question how much more downside there could be compared to the larger upside potential... considering that Sprint is reportedly going to carry the all-new Apple iPhone5, which could be a good thing for Sprint.
One risk is that their next earnings report could be horrible, and the stock could get hammered as a result, because they didn't have the iPhone in their last quarter, and they have been losing customers in previous reports. On the other hand, looking forward could boost the share price. Defininte risk, but I am willing to take the risk, all things considered.
I recently dropped the DVD portion of Netflix and the only reason I kept the streaming portion is because of my daughter. In a few years when she loses interest I'll cancel the streaming because I never do it myself. When you look at the Netflix business modlel it becomes real suspect IMO without the two intertwined. In streaming you can't get anything until it is pretty old. To me it's the center isle of Blockbuster where they gave it away to members on weekdays with a purchase from the walls. If the two had held together at a marginal price increase I'd have stayed fully subscribed simply knowing I can get a new DVD at anytime, though it became an increasing pain to keep your DVD queque up to date for releases. I have a feeling Netflix may get surprised at how the DVD business had a bigger hand in carrying the streaming business than they knew. Another bad factor is how the studios will squeeze them if the service gets real popular. Starz just dropped them and it's an important factor in their library that will disappear in 6 months. I think any business that is dependent on two variables - Studios for content and Cable for delivery, is ultimately about as profitable as a Supermarket. Once the studios are organized enough they can bypass Netflix and go right through the Cable providers directly.
Even after its tumultuous drop Netfix at a 32 PE is still seriously overvalued IMO.
I understand your posts about Netflix, and appreciate them.
I think it's fairly obvious that Netflix has challenges moving forward. The share price fell off a cliff over 57% from its 52-week high! That didn't happen without reasons.
That said, I am not sure that it's safe to assume that the company has gone from $304/share to being worthless. I must think that the company is very aware of its situation, and will take every step it can to deal with its situation. It's hard to know if Netflix will be successful in doing so. Two questions here are... what is the true value of the company, and what is its strategy moving forward? To be cetermined.
From my perspective, I am only interested in seeing if I can make some gains from its stock. We'll see how it works out. It's real easy to hit the "sell" button if it becomes necessary.
It's a classic traders stock and I feel for anyone who traded it at $300 because it'll never see the multiple to produce that price again. For a LT investor it should be totally avoided. Over the long-term it needs to make itself partly a studio with must see content as part of the story. That way it has something it owns and charges for. But I look at Netflix trading at a PE that is more than 200% of Apple and with a large jump in liabilities and I think it's a joke.
I think two things happened here, Tag. First was one of those inclandestine meetings among hedge fund managers to exit without killing each other that you once described in a post and the second was a lot of questioning about the business model surviving.
It's a classic traders stock and I feel for anyone who traded it at $300 because it'll never see the multiple to produce that price again.
Len,
YES!
Even when Cramer was trying to sell the hell out of Netflix to all his unsuspecting viewers, I was always suspicious. We have seen many innocent people take a terrible bath with this stock. It's shameful. Cramer kept saying it was going to go higher and higher and cited international expansion and all sorts of BS, hitting that "buy, buy, buy" soundtrack on his TV program. Pathetic.
The only single reason I have bought it now is that it has been so horribly hammered that it might make some quick gains on a little rebound. I think we will know soon enough, and if nothing comes of it, I can sell it in a micro-second... literally.
I definitely appreciate your perspective here, and I do pay attention to your views. I will be watching it very closely moving forward, and I will take any gains it might provide sooner than later. If it falls apart, I'll dump it before it knows what hit it.
After many years of paying for `real money`, I am so tired of Cramer and his consistently poor advice, I went to cancel the automatically renewed subscription.....Alas it can`t be cancelled , has to expire....As some of you know they changed their product recently, and for me it was a really poor change.......I guess that should explain my thoughts on Cramer and Company..
Charlie, I think anything negative is worth worrying about until you and I know what the suite is about....I personally think it might be `sore feelings` as Apple recently won a suite against them....Sort of strange as Apple is their big customer......Maybe when they make aapl products they cheat a bit.....and rob abit Alll this is just from memory so I might have the companies mixed up....Tony
Btw, should we be worried at all about all the lawsuits against AAPL on infringement rights?
I'm not worried about them. Apple has beeen a great innovato, not the copier that Microsft is and Google is rapidly becoming. The Governments growing interest in Google is a lot more scary for that stock.
You guys have not answered my question from above. Here it is again:
Btw, should we be worried at all about all the lawsuits against AAPL on infringement rights?
Sorry Charlie...
So much going on, I overlooked it. I think that Apple and others have exchanged lawsuits as though the whole process is a standard business practice! Personally, I think it is shameful, as so many of them are likely unwarranted, and only an underhanded strategy to stop competition.
On the other hand, Apple's and other company's innovations should be protected, as should their intellectual property rights and registered patents.
Am I worried? Well, as I said, it's practically standard operation procedure and business as usual... but... it is always a possibility that one of these days there could be a lawsuit that results in a ruling that negatively impacts Apple. However, even if that were to happen, Apple would have more than enough money to deal with it. The worse case scenario is that Apple would be instructed to discontinue the sale of a major product... and that is extremely unlikely, IMO. In such a scenario, Apple would appeal the ruling, and some settlement would likely result.
There are ALWAYS risks. For example, it was reported today that Apple's new iPhone5 has a touch screen issue. Is it true? Well, we'll find out over time. Remember the iPhone 4's antenna issue? At first, many of us thought it could be a huge deal, especially the way Apple seemed to brush it under the carpet, and finally offered a free case for a while... but eventually it seemed the public didn't care anyway. They just wanted their new iPhone no matter what!
Heck, I sometimes think that Apple products don't even have to work and people would still buy them for their "cool factor".
So, I don't know if that answers you question, But I'll give you another perspective you might like. Let's just say that one day a big court ruling comes down against Apple. What would happen to the stock? Big decline, right? Well, if that happens, let's just consider it a GREAT BUYING OPPORTUNITY!
An issue for Apple that I thought would have made more news was reported on the local news here the other night. I've been busy so if it was reported on the business news I missed it. The issue was that when you log onto Apple with your user ID to do anything the account stays open for purchases for 30 minutes. Many people just pass their e-mail names or user names and passwords to their kids just not to be bothered or log the kids in directly if they are very young. It seems plenty of people have automatically told Apple not to confirm i-tune purchases in the past and that response auto charges their credit card on file. Clearly most folks knew nothing about this 30 minute rule but it was apparently set up to make i-tunes purchases easy. The money ultimately goes to the game or source the kid is playing on after Apple takes its cut. There are some kids games that have household and other products within them that allows you to make actual purchases. The combo of parents unawareness of both the 30 minute rule (I never knew about it till the other night) or that purchases can be made inadverently based on a childrens game are both troubling and led to the story. In this case if their kid clicks on an item more than once the credit card gets auto charged. I didn't catch the whole story so I'm a little fuzzy on details but this particular story was about a poor family that had over $500 in charges racked up by their 5 year old on a game. Apple stepped in and made all the monies get refunded but their solution to ccorrect the matter systematically rested on their content providers and they took only minimal steps to upgrade the safeguards for the consumer with their software.
Let's just say that one day a big court ruling comes down against Apple. What would happen to the stock? Big decline, right? Well, if that happens, let's just consider it a GREAT BUYING OPPORTUNITY!
Apple may have met its match with giant Samsung. Apple has lost its bid for a Europe wide block on the Galaxy Tab 10.1. All indications it is lighter and superior to the iPad2. Will the iPad3 eclipse or will the next Galaxy win the prize. I think Apple would have been better off just building and selling without doctoring photos to shoot down the competition. It has backfired. I don't think it will impact either Apple or Samsung to any significant extent. They should both have a great Christmas with what is due out shortly.
I'm too lazy to edit that other post but it's 15 minutes not 30 and the FTC is investigating Apple over inadvertent apps purchases. The story I saw had purchases of household items within a game for young children though. One big fear I have with Apple is that it will grow too large for itself to police.
Apple may have met its match with giant Samsung. Apple has lost its bid for a Europe wide block on the Galaxy Tab 10.1. All indications it is lighter and superior to the iPad2.
I usually agree with you, but I find myself completely disagreeing with you on this one Gary. I think that a good competitive tablet legitimizes the category and will further motivate consumers to more likely consider a tablet purchase, as opposed to viewing a tablet as a novelty product. In addition, consider the value of Apple's chain of retail stores with all their cool and amazing products that sync with one another. And, where's the chain of Samsung stores? So, in the end, the Galaxy Tab is just a quality alternative (to the iPad) that will be available at Best Buy, Verizon, etc.
Besides, good competition will keep Apple up on its game... and that's a very good and necessary thing, IMO.
I find myself completely disagreeing with you on this one Gary.
I am confused on what you disagree with. I am not saying that Samsung will significantly cut into iPad sales. Just that it has a competitive product that is more compatible with the rest of the world's protocol. Apple has a tendency to get into a snit and shoot themselves in the foot. Such as their ongoing battle with Adobe over Flash Player. Reading reviews that is the complaint I read most. Apple has a very narrow consumer group to depend on. Samsung does not sell you a tablet, they may sell you a refrigerator or TV. Apple is riding high right now. So was Motorola just a few years ago.
viewing a tablet as a novelty product.
Only time will tell that. I thought the Netbook was a great idea, and it is all but history in less than 2 years. I am tempted by the tablets. Just think they are overpriced at this point. Heck I am still waffling on getting a smartphone. I just don't talk on the phone much and spend more time at home than anyplace else.
As for Apple stock. If they were not so greedy and paid dividends I would probably have some in my portfolio.
OK... you posted "Apple may have met its match with giant Samsung."
Now that you have clarified what you meant by that... in terms of Samsung building their Galaxy product that could be considered as good or better than the iPad from strictly a benchmark perspective, I would not disagree with that possibility. However, the iPad3 is not out yet, so we don't know how they will stack up against one another from that pure benchmark comparison. But that said, I'm not so sure it would outsell the iPad, even if it were to have some benchmark advantages. There are other factors to consider, such as physical product style, preferred operation system, available apps, media download and playback (iTunes), data synchronization with other products... so even the benchmark measurements would only be part of the picture.
I thought the Netbook was a great idea, and it is all but history in less than 2 years.
Early netbooks were waaaay too weak and slow. I think the netbook will make a comeback, but in an evolved fashion... more powerful, and with touchscreen. This will blur the difference between the netbook and the tablet. We already witness how the iPad is frequently hooked up to a third-party keyboard, and other company's have designed hybrid tablets with keybooards. The latest 11" MacBook Air is the best example of how an ultra light mobile notebook can be a huge success. It is almost a netbook, but Steve Jobs never wanted to call it that. It won't be long, IMO, before we could see even further merging of the products... IOW, the MacBook Air and iPad could see themselves merged into a whole new product line whereby the MacBook Air becomes even more portable with touchscreen... making it more like a tablet with keyboard that could be used if desired.
As for Apple stock. If they were not so greedy and paid dividends I would probably have some in my portfolio.
I understand, but I must say I think that' s kind of silly. Even without a dividend, the OVERALL return is the better barometer, IMO. Why cheat yourself, over the principle of the thing?
I think the iPad has far too much lead for anyone to pass them. Samsung has made the best attempt to date. Way behind in sales. Partly due to the court injunctions in the EU and Australia. Apple has a big advantage with their stores as well. Samsung is just another option at Best Buy or the Box stores. I really like the MacBook Air, in both sizes. I have such a difficult time touching a computer screen. I guess it is the neat freak in me. Just looking at all the tablets the other day completely smudged up with greasy fingerprints really turned me off. The sales lady at Best Buy said she was constantly cleaning them. If I get a tablet it will be tied to Verizon 4G to get up to date NAV and POI information.
I have tried on a very small scale to do what you do with day trading. I just don't have the heart and mind for it. I am so used to buying stocks and sitting on them. Unlike real estate. That I can buy and sell in quick fashion without a second thought. Most of the time it is at least a year to take advantage of LTCG taxes. If AAPL ever splits 10 for 1 I would probably buy a few shares. Hard to fault a company sitting on $76 billion in cash and securities.
Gold is the same way for me as stocks. I should have sold when you advised me to. I could have bought it back for $40k less today. Oh well that's life.
Thanks for your input on this issue Len and TM. I got a bit concerned yesterday afternoon when I read that Samsung is trying to block Apple from selling the iPhone5 in China (I think it's China) and Europe. If they are successful on this, it would definitely be a big downer for AAPL.
Having said this, I did purchase 90 more shares of AAPL yesterday. I will likely be pulling a Tag with these 90 shares. What do you mean by this, you may ask? In case you cannot figure it out, I will likely be selling these shares on a big sudden rally and repurchasing them on nice dips. This should make TM very happy. This strategy will only work of course, if there is a big upswing from here. What says you TM? Do you like my strategy or are you now becoming a long term trader with AAPL?
I am going long on Apple. However, if it falls to the level of my cost, I would sell it and buy it cheaper. Other than that, I expect to hold it for a very long time.
YES! I like the idea of what you are going to do, but I am very concerned because you must be aware that it requires a LOT of close attention. The market moves very large and very fast on some days. If you are going to day trade, be careful... you have to stay on top of it, or else!! If you are just going to buy and sell more casually, I am not sure if success is possible like that. I think you have to choose between paying very close attention, or just let it ride long term. I am not sure there is a middle ground that will work. I really don't know.
Your premise that it would require a big upswing from here is probably accurate in order for it to work. The problem is that it's hard to know when that will happen. I have been in front of the monitor and all of a sudden I watch the market go very positive as it digs itself out of a hole within a very short time, and I have also seen (like Thursday's last hour of trading) the market suddenly tank within a very short time.
This economy is dangerous right now, and I do not believe there is a normal gradual upward trend, as there is in a healthy economy. I see the market having fits and spurts in all directions and very large and dangerous swings. It really is dangerous. I've gotten burned a couple times, otherwise I'd be lot better off... but they are lessons I am learning as I get better and better at day-trading.
When/if the market gets healthy again one day, I truly believe my acquired trading skills will be invaluable.
So... BE CAREFUL!!!!!! The world is teeter-tottering on the brink of anything and everything.
Bottom line... if you can't pull the trigger (sell immediately) in a hurry, don't mess with it. Otherwise, have at it.
There are trader stocks and their are long stocks. Apple is a long stock. Notice how it's at or near an all time high in a bad market? To me it's also become a flight risk stock. You yourself have said this when you stated "it's better than gold". So I'm not sure your strategy is a wise one. The stock can easily reach a level it never comes back to and you have to be on top of things at all time. I noticed the other day how you were unaware of Apple or Netflix's moves. So I d'ont think that style is for you. Apple is headed for $550 maybe $600 within a year, so why bother trading in and out like a yoyo. Trying to make profits on brief dips of the strongest stock I ever saw is purely gambling.
Apple is headed for $550 maybe $600 within a year, so why bother trading in and out like a yoyo. Trying to make profits on brief dips of the strongest stock I ever saw is purely gambling.
Len,
Unless I am misunderstnding you here, you are clearly wrong about that.
Let's look at this scenario for Charlie. If he continues to keep his long-term "investment" shares in AAPL completely seperate from his "trading" shares, then he should have no issue.
What he would do is buy shares only if there is a significant dip (let's use 2%-5% for the sake of this example and that would depend upon his established ground rules that he would set for himself), and establish that as his base cost. As those shares increase in value, Charlie would NOT sell them. If, however, there is another dip that brings the share price UNDER the original base cost, Charlie should buy more shares at that new lower price. His base cost would then be LOWER than it was... the average of the latest cost and the prior cost. As the stock returns to the upside, Charlie would sell the same number of shares he bought the most recent purchase at any time at or after the share price reaches the new average cost per share. The result is that Charlie would own the same number of shares and his profit margin would be GREATER than it would have been if he did nothing at all.
What's interesting here is that Charlie would not be trading back and forth on a "trader" stock. He would actually be increasing his profit margin on a long-term stock. The assumption here is that the long-term stock would have a setback that brings the share price to a level under his latest base cost. And this is now realistic in this current market environment, so it is entirely possible. Once the stock reaches a point that it's share price is far, far ahead of its base cost, then it is no longer possible to use this strategy any longer, unless Charlie was to establish a new and totally seperate account all over again, but leave the other account alone because it would not be wise to destroy the base cost that is so much to his advantage.
The next thing that is easy for Charlie to do on a long-term account, is to simply have a strategy in place that he buys more shares every time the stock dips , say 2% or 3%, or some number that he likes, but he should never sell unless he wants to ring the register a little, OR... the stock price actually takes a big hit and dips below the slowly-increasing base average cost per share, in which case Charlie should decide if he intends to continue to invest long-term or not, and if so, he would employ the strategy from above, and he would buy the stock at its lower price, and then sell the same number of shares once the price regains it's ground... leaving him with a new lower base cost and increased profit, and cash on the sideline to take advantage of the next dip.
This strategy of investing is not gambling. In fact, it is hands on responsible, and and is not riskier than ANY investment in the stock market. The only real risk that exists for a stock like AAPL is that the stock tops out and NEVER returns to its highs. That risk is the same no matter HOW Charlie is investing. If Charlie were to reach that point, he would sell ALL the shares except those (if any at all) that he felt MIGHT be worth investing on a super long term basis in case the stock were to ever return to an upward trend again.
The exception to this whole strategy of lowering the base cost would be if Charlie was convinced without a doubt that the entire position could be sold and then repurchased at a lower price, instead of averaging the base cost as I explained in great detail above. If the investor/trader was wrong, and the stock did NOT decline as expected, then any new position would be at a higher base cost, and the difference between the old base and the new base would be lost... either temporarily or permanently, depending upon further price swings, whereby Charlie could once again utilize the strategy to lower the average base cost... which would reduce or eliminate that loss, should it ever be realized.
Your concern that Charlie is not in a position to pay enough attention to the market action is very legitimate. If it's true that Charlie admits that he can not spend the time necessary, then his best bet would be to simply buy on significant dips. If he were to achieve a 2% advantage on his accumulated shares, as an example, that would be perfectly fine, IMO. The total PERCENTAGE gain would appear lower, but the overall total NET gain would be higher. IOW, as a math EXAMPLE only... a 5% gain on $1,000,000 of strategically accumulated stock is better than a 7% gain on $500,000 of "hands-off" stock and $500,000 cash. And, of course a 10% gain on $500,000 of "traded" stock and $500,000 of sidelined cash is even better.
I want to finish with this...
A "hands-off" long-term investor can NOT take advantage of the smaller micro-gains that are only available to the trader that is willing to work at harvesting them. The accumulation and sum of all those micro-gains can be significant and is NOT available to the "hands-off" investor.
A graphic example that I like to use is that long-term investing is like walking up a mountain while using a yo-yo.
The yo-yo's ups and downs are irrelevant to the final investment outcome of reaching the mountain peak (hands-off investing), yet the yo-yo's ups and downs represent many, many opportunities (trading).
Notice how BOTH occur at the same time! They are both available, at the investor's/trader's discretion, and willingness and ability to take advantage.
First of all, I am talking about this type of trading with only the 90 shares I purchased yesterday. And as far as me not knowing what AAPL and Netflix was doing, it basically only involves Netflix. Since I had no desire to buy this stock I was paying zero attention to it over the past several weeks. As far as AAPL is concerned, I was not sure what it was doing back on Monday when I was driving all day. Otherwise, I watch Apple like a hawk.
But in any case, I am holding the great majority of my AAPL shares for the long haul. I was just thinking that if it were to sddenly jump back toward the highs of the other day ($423), I would sell he 90 shares I purchased yesterday with the hope that there will be a dip and I can then buy even more than 90 shares. Trust me. I will never match TM on short term trading. He is one of a kind in this regard.
Comments
It is possible that you and TM are correct in selling. I am holding every stock I own at this point. IF TM's thinking is right, I will obviously be in deep kaka. I am by nature more optimistic (except in 2008) so only time will tell what is going to happen. I hope that if TM is right, I see strong signs early enough to sell my AAPL while I still have good profits.
I'm not optomistic, I'm just saying earnings are starting to look better to me and I'll bet they turn out better than most are expecting. I d'ont think there is a real global banking problem. I think there is a serious Euro problem. Had Europe still had all their independent currencies the countries in trouble would do exactly what the US is doing, just at higher rates. But they are now tied to the ECB, who never foresaw the debt issues and the politics of it all and how strong members/currencies would balk at helping the weaker economies. When I used to travel to Amsterdam regularly in the 90's some of the Dutch financial pros in my company hated the one currency concept because the Guilder was so strong and they were afraid it would paralyze weaker governments/economies that needed to act in bad times. They turned out dead right. But Europe was in great shape back then and folks shaping the one currency movement were in euphoria and had eyes on becoming the world standard over the dollar. This was despite the fact that nearly every European I ever met was most interested in who would win the next Presidential election of the day or who would control Congress in the off years. We got a good taste of how paralyzing it all can be with the debt ceiling issues here. Nevertheless we are one country/one currency so its stupid politics in just one place that has to be overcome. The ECB has no choice ultimately but to bail out the PIGS because the strong economy exports of Germany, Holland and others will get so seriously damaged if they d'ont. Their only other choice is to dissolve the Euro literally overnight and give up on it being the prime currency of the world and let the PIGS solve their own mess. The Euro never had the chance to be the global standard anyway. But IMO we'd have no banking problem if we had no Euro. So the ultimate place to deal with financial banking problems in Europe is to decide on the fate of the Euro or realize that if it is to be kept in place than lending and lending is on the table literally forever.
It's not just Apple. Look at Bed, Bath and Beyond, McDonalds, utility companies and others. The real strong companies are at or near all time highs even though the market is down 10-15%. They have a way of finding their way to the top and when the market gets back to 12,500 they will be well above where they were when the market was at 12,500 a few months ago. Quality companies, super strong Balance Sheets and quality earnings that grow every year. You just have to sort them out.
Well, get ready for a volatile day, unlike any you've seen for a while. As far as earnings, I think they will be very mixed, and not all of them will be better than expected... there will be plenty of disappointing earnings reports, and lowered guidance. Regarding banking, Citi, and others are international banks, so I disagree with you, and banks overseas have their share of troubles, and I do think the situation will be globally interactive, and will have global consequences.
Generally, I would sum it up to say that I do believe we are treading in an economic slowdown on a global scale.
That doesn't mean economies stop altogether... commerce will and must continue... but things will be dicey.
The market will offer opportunities to cherry pick... in fact, I just bought some stocks during pre-market that seem waaaay too low.
TM
BUY NOW!!!!, carefully.
TM
Why now other than it might be oversold?
Also, the market appeared to be in a state of panic, IMO... and that can be a time to buy.
Little by little very nice positions can be built with attractive costs per share.
I bought and sold AAPL (as well as AMZN and XOM) several times today, but held 500 shares at $398.
Also, you must consider that I timed this event very well, by completely selling out of the market yesterday, so I avoided all the bleeding today, and was in a position to cherry pick.
On a more speculative and risky note, I also bought and held onto 30,000 shares of Sprint, priced less than $3 / share.
All that said, there is still SERIOUS risk going forward, although the last few minutes of today's session were slightly encouraging.
TM
I just can not figure out why in three days the Dow is off say eight hundred points....Maybe not that much or maybe more.....If you and the rest of the gang decid `why` please let me know
Welcome to the Apple club.
In my family, so far, we've purchased 4 iPhones, 5 iPods, and 2 MacBook Pros. The kids have purchased thousands of songs from iTunes, and in addition, my business uses a number of high-end Macs (for graphics). That said, I personally still prefer my HTC EVO 4G cellphone by a wide margin. However, I am looking forward to the possibility of getting the iPhone5 in a couple of weeks, and also the iPad3, when it is finally released, if it has a USB connection. Also, my wife wants a MacBook Pro of her own, and I might get an iMac one of these days. So, there's no doubt that we're doing our share of supporting Apple around here, as well as my ownership of AAPL shares!
To answer your question, the problem has been Europe mostly... they've got serious problems... and China is slowing down... as well as the Fed's action (seen as inaffective and wasteful) & language, which was pessimistic. Also, the jobs numbers were worse than expected. Add it all up and combine it with the increasing sentiment that we are in (or headed towards) a recession.
And add the news that the government MAY shut down again. And, of course, don't forget "the machines" and their HFT.
Everything has hit at once... like the perfect storm. And all the talk of a global economic meltdown doesn't help to motivate investors.
I think you will be very glad about your purchase of AAPL shares. I suggest that if AAPL shares take a hit, that you buy more on significant dips, which are rare buying opportunities.
TM
I did buy Wal Mart (WMT) late in the day. It just seems so darn cheap I couldn't resist. I was flying high last week but the last 2 days put me down a couple of grand in my trading acct. for the year...
2013 LX 570 2016 LS 460
Sounds like you avoided a lot of bleeding today. That's fortunate. Also, because you are a smart investor/trader.
You'll be in a much better position by year's end, IMO. I think we will see a better market by then. I posted quite a ways back that November was the time the market would improve, and I haven't changed my mind.
However, political problems (Obama) could change things.
TM
2013 LX 570 2016 LS 460
There is not way I can trade as you do. I am much more of a longer term trader.
I snapped up another 250 shares. If it gets significantly lower, I'll probably buy a little more.
TM
I now own HPQ shares. Take a serious look. Jump in or ease into it carefully... your choice... but this could be one of those very rare opportunities, especially if you are able to take a long-term view.
TM
It just gets better and better for Apple.The stock IMO is more undervalued than ever with the notion of employees getting greater and greater clearance to use what they want at the office as per the article below. I've moved my expectations up to $575-600 now in the next year. Once again I think Apple is in its own investment class.
IMO - HP is a risk even at these prices. I'd be in and out on any jump because I doubt the company can hold it. On a fall I'd get out fast. Personally I think HP needed someone a lot more creative than Whitman as a CEO.
http://www.nytimes.com/2011/09/23/technology/workers-own-cellphones-and-ipads-fi- - - - nd-a-role-at-the-office.html?_r=1&ref=business
Once again, thanks for this awesome information. I have been hearing the same thing just by watching CNBC, etc. More and more workers are bringing their iPads to work to be more productive.
I totally agree that AAPL is in its own investment class. As I have stated on several occasions the past month or two, owning AAPL is better than owning gold. I think the wire transfer will be complete in the next hour or so and I am going to buy more AAPL shares unless it is already much higher for the day by then.
EDIT: Btw, should we be worried at all about all the lawsuits against AAPL on infringements rights?
Then consider that Apple products have still only touched the surface on a global level. In order to conquer the world, AAPL will likely develop a less costly iPhone and iPad so that they are more affordable in areas where they would otherwise be too expensive.
IMO, This stock will DOUBLE within a few years.
TM
If you do the math, and consider its existing customer base, I think it makes sense at this level to start easing into Netflix.
TM
Companies like Comcast aren't too happy that Netflix will use/clog their pipe while not having to share the revenue.
Companies like Comcast aren't too happy that Netflix will use/clog their pipe while not having to share the revenue.
Well, I'm just looking to make a few $$$$ on its stock.
TM
You are a smart fellow. I am convinced that this huge and important global company is now taking the bull by the horns to get itself on track. It is amazing to me that it had done as well as it did with its pitiful leadership.
With Meg at the helm, and with a renewed energy within the firm, I can see an improved Hewlett-Packard within a few years. I bought and sold the stock, back and forth, several times today, and owned thousands of shares at one point, but at the close of today's session I have kept 500 shares @ $21.74.
I think you and I will be glad we bought HPQ today. If the share price declines, and it certainly could, I expect I would buy more, lowering my average cost per share, and then flip the extra shares on the movement upswing, in order to maintain the same number of shares (but at a lower cost). Because of the price I acquired the shares, my 500 shares I own so far is up 2.65% today, even though the stock closed down 2.11%. That's a good position to be in, IMO.
We'll see how it goes.
TM
Did you buy those shares of Sprint you posted about?
My 30,000 shares , which I own at $2.99, closed up a little today... closing at $3.18, after hitting a high of $3.24. The stock closed up 5.64%, and my position is up 6.21%.
I don't think it's too late to buy, especially if the stock dips again... and Sprint has a history of major price swings, and it is now fairly cheap, and it is close to its 52-week low, so it is a big question how much more downside there could be compared to the larger upside potential... considering that Sprint is reportedly going to carry the all-new Apple iPhone5, which could be a good thing for Sprint.
One risk is that their next earnings report could be horrible, and the stock could get hammered as a result, because they didn't have the iPhone in their last quarter, and they have been losing customers in previous reports. On the other hand, looking forward could boost the share price. Defininte risk, but I am willing to take the risk, all things considered.
TM
Even after its tumultuous drop Netfix at a 32 PE is still seriously overvalued IMO.
I understand your posts about Netflix, and appreciate them.
I think it's fairly obvious that Netflix has challenges moving forward. The share price fell off a cliff over 57% from its 52-week high! That didn't happen without reasons.
That said, I am not sure that it's safe to assume that the company has gone from $304/share to being worthless. I must think that the company is very aware of its situation, and will take every step it can to deal with its situation. It's hard to know if Netflix will be successful in doing so. Two questions here are... what is the true value of the company, and what is its strategy moving forward? To be cetermined.
From my perspective, I am only interested in seeing if I can make some gains from its stock. We'll see how it works out. It's real easy to hit the "sell" button if it becomes necessary.
TM
I think two things happened here, Tag. First was one of those inclandestine meetings among hedge fund managers to exit without killing each other that you once described in a post and the second was a lot of questioning about the business model surviving.
Len,
YES!
Even when Cramer was trying to sell the hell out of Netflix to all his unsuspecting viewers, I was always suspicious. We have seen many innocent people take a terrible bath with this stock. It's shameful. Cramer kept saying it was going to go higher and higher and cited international expansion and all sorts of BS, hitting that "buy, buy, buy" soundtrack on his TV program. Pathetic.
The only single reason I have bought it now is that it has been so horribly hammered that it might make some quick gains on a little rebound. I think we will know soon enough, and if nothing comes of it, I can sell it in a micro-second... literally.
I definitely appreciate your perspective here, and I do pay attention to your views. I will be watching it very closely moving forward, and I will take any gains it might provide sooner than later. If it falls apart, I'll dump it before it knows what hit it.
TM
You guys have not answered my question from above. Here it is again:
Btw, should we be worried at all about all the lawsuits against AAPL on infringement rights?
Charlie, I think anything negative is worth worrying about until you and I know what the suite is about....I personally think it might be `sore feelings` as Apple recently won a suite against them....Sort of strange as Apple is their big customer......Maybe when they make aapl products they cheat a bit.....and rob abit
I'm not worried about them. Apple has beeen a great innovato, not the copier that Microsft is and Google is rapidly becoming. The Governments growing interest in Google is a lot more scary for that stock.
Btw, should we be worried at all about all the lawsuits against AAPL on infringement rights?
Sorry Charlie...
So much going on, I overlooked it. I think that Apple and others have exchanged lawsuits as though the whole process is a standard business practice! Personally, I think it is shameful, as so many of them are likely unwarranted, and only an underhanded strategy to stop competition.
On the other hand, Apple's and other company's innovations should be protected, as should their intellectual property rights and registered patents.
Am I worried? Well, as I said, it's practically standard operation procedure and business as usual... but... it is always a possibility that one of these days there could be a lawsuit that results in a ruling that negatively impacts Apple. However, even if that were to happen, Apple would have more than enough money to deal with it. The worse case scenario is that Apple would be instructed to discontinue the sale of a major product... and that is extremely unlikely, IMO. In such a scenario, Apple would appeal the ruling, and some settlement would likely result.
There are ALWAYS risks. For example, it was reported today that Apple's new iPhone5 has a touch screen issue. Is it true? Well, we'll find out over time. Remember the iPhone 4's antenna issue? At first, many of us thought it could be a huge deal, especially the way Apple seemed to brush it under the carpet, and finally offered a free case for a while... but eventually it seemed the public didn't care anyway. They just wanted their new iPhone no matter what!
Heck, I sometimes think that Apple products don't even have to work and people would still buy them for their "cool factor".
So, I don't know if that answers you question, But I'll give you another perspective you might like. Let's just say that one day a big court ruling comes down against Apple. What would happen to the stock? Big decline, right? Well, if that happens, let's just consider it a GREAT BUYING OPPORTUNITY!
TM
Apple may have met its match with giant Samsung. Apple has lost its bid for a Europe wide block on the Galaxy Tab 10.1. All indications it is lighter and superior to the iPad2. Will the iPad3 eclipse or will the next Galaxy win the prize. I think Apple would have been better off just building and selling without doctoring photos to shoot down the competition. It has backfired. I don't think it will impact either Apple or Samsung to any significant extent. They should both have a great Christmas with what is due out shortly.
http://gigaom.com/2011/02/22/ftc-eyes-apple-in-app-purchases-by-children/
I usually agree with you, but I find myself completely disagreeing with you on this one Gary. I think that a good competitive tablet legitimizes the category and will further motivate consumers to more likely consider a tablet purchase, as opposed to viewing a tablet as a novelty product. In addition, consider the value of Apple's chain of retail stores with all their cool and amazing products that sync with one another. And, where's the chain of Samsung stores? So, in the end, the Galaxy Tab is just a quality alternative (to the iPad) that will be available at Best Buy, Verizon, etc.
Besides, good competition will keep Apple up on its game... and that's a very good and necessary thing, IMO.
TM
I am confused on what you disagree with. I am not saying that Samsung will significantly cut into iPad sales. Just that it has a competitive product that is more compatible with the rest of the world's protocol. Apple has a tendency to get into a snit and shoot themselves in the foot. Such as their ongoing battle with Adobe over Flash Player. Reading reviews that is the complaint I read most. Apple has a very narrow consumer group to depend on. Samsung does not sell you a tablet, they may sell you a refrigerator or TV. Apple is riding high right now. So was Motorola just a few years ago.
viewing a tablet as a novelty product.
Only time will tell that. I thought the Netbook was a great idea, and it is all but history in less than 2 years. I am tempted by the tablets. Just think they are overpriced at this point. Heck I am still waffling on getting a smartphone. I just don't talk on the phone much and spend more time at home than anyplace else.
As for Apple stock. If they were not so greedy and paid dividends I would probably have some in my portfolio.
OK... you posted "Apple may have met its match with giant Samsung."
Now that you have clarified what you meant by that... in terms of Samsung building their Galaxy product that could be considered as good or better than the iPad from strictly a benchmark perspective, I would not disagree with that possibility. However, the iPad3 is not out yet, so we don't know how they will stack up against one another from that pure benchmark comparison. But that said, I'm not so sure it would outsell the iPad, even if it were to have some benchmark advantages. There are other factors to consider, such as physical product style, preferred operation system, available apps, media download and playback (iTunes), data synchronization with other products... so even the benchmark measurements would only be part of the picture.
I thought the Netbook was a great idea, and it is all but history in less than 2 years.
Early netbooks were waaaay too weak and slow. I think the netbook will make a comeback, but in an evolved fashion... more powerful, and with touchscreen. This will blur the difference between the netbook and the tablet. We already witness how the iPad is frequently hooked up to a third-party keyboard, and other company's have designed hybrid tablets with keybooards. The latest 11" MacBook Air is the best example of how an ultra light mobile notebook can be a huge success. It is almost a netbook, but Steve Jobs never wanted to call it that. It won't be long, IMO, before we could see even further merging of the products... IOW, the MacBook Air and iPad could see themselves merged into a whole new product line whereby the MacBook Air becomes even more portable with touchscreen... making it more like a tablet with keyboard that could be used if desired.
As for Apple stock. If they were not so greedy and paid dividends I would probably have some in my portfolio.
I understand, but I must say I think that' s kind of silly. Even without a dividend, the OVERALL return is the better barometer, IMO. Why cheat yourself, over the principle of the thing?
TM
I think the iPad has far too much lead for anyone to pass them. Samsung has made the best attempt to date. Way behind in sales. Partly due to the court injunctions in the EU and Australia. Apple has a big advantage with their stores as well. Samsung is just another option at Best Buy or the Box stores. I really like the MacBook Air, in both sizes. I have such a difficult time touching a computer screen. I guess it is the neat freak in me. Just looking at all the tablets the other day completely smudged up with greasy fingerprints really turned me off. The sales lady at Best Buy said she was constantly cleaning them. If I get a tablet it will be tied to Verizon 4G to get up to date NAV and POI information.
I have tried on a very small scale to do what you do with day trading. I just don't have the heart and mind for it. I am so used to buying stocks and sitting on them. Unlike real estate. That I can buy and sell in quick fashion without a second thought. Most of the time it is at least a year to take advantage of LTCG taxes. If AAPL ever splits 10 for 1 I would probably buy a few shares. Hard to fault a company sitting on $76 billion in cash and securities.
Having said this, I did purchase 90 more shares of AAPL yesterday. I will likely be pulling a Tag with these 90 shares. What do you mean by this, you may ask? In case you cannot figure it out, I will likely be selling these shares on a big sudden rally and repurchasing them on nice dips. This should make TM very happy. This strategy will only work of course, if there is a big upswing from here. What says you TM? Do you like my strategy or are you now becoming a long term trader with AAPL?
YES! I like the idea of what you are going to do, but I am very concerned because you must be aware that it requires a LOT of close attention. The market moves very large and very fast on some days. If you are going to day trade, be careful... you have to stay on top of it, or else!! If you are just going to buy and sell more casually, I am not sure if success is possible like that. I think you have to choose between paying very close attention, or just let it ride long term. I am not sure there is a middle ground that will work. I really don't know.
Your premise that it would require a big upswing from here is probably accurate in order for it to work. The problem is that it's hard to know when that will happen. I have been in front of the monitor and all of a sudden I watch the market go very positive as it digs itself out of a hole within a very short time, and I have also seen (like Thursday's last hour of trading) the market suddenly tank within a very short time.
This economy is dangerous right now, and I do not believe there is a normal gradual upward trend, as there is in a healthy economy. I see the market having fits and spurts in all directions and very large and dangerous swings. It really is dangerous. I've gotten burned a couple times, otherwise I'd be lot better off... but they are lessons I am learning as I get better and better at day-trading.
When/if the market gets healthy again one day, I truly believe my acquired trading skills will be invaluable.
So... BE CAREFUL!!!!!! The world is teeter-tottering on the brink of anything and everything.
Bottom line... if you can't pull the trigger (sell immediately) in a hurry, don't mess with it. Otherwise, have at it.
TM
There are trader stocks and their are long stocks. Apple is a long stock. Notice how it's at or near an all time high in a bad market? To me it's also become a flight risk stock. You yourself have said this when you stated "it's better than gold". So I'm not sure your strategy is a wise one. The stock can easily reach a level it never comes back to and you have to be on top of things at all time. I noticed the other day how you were unaware of Apple or Netflix's moves. So I d'ont think that style is for you. Apple is headed for $550 maybe $600 within a year, so why bother trading in and out like a yoyo. Trying to make profits on brief dips of the strongest stock I ever saw is purely gambling.
I am concerned that some of us are getting too giddy about AAPL, due to its recent big run.
That's dangerous thinking, and we all need to be careful about letting ourselves get drunk on the stock.
Tony also... be careful.
In the end, the market can crush it. It is not invincible.
Anyway, just a word of caution to all.
That said, I still love the stock, and expect more upside... but I'm always careful.
TM
Len,
Unless I am misunderstnding you here, you are clearly wrong about that.
Let's look at this scenario for Charlie. If he continues to keep his long-term "investment" shares in AAPL completely seperate from his "trading" shares, then he should have no issue.
What he would do is buy shares only if there is a significant dip (let's use 2%-5% for the sake of this example and that would depend upon his established ground rules that he would set for himself), and establish that as his base cost. As those shares increase in value, Charlie would NOT sell them. If, however, there is another dip that brings the share price UNDER the original base cost, Charlie should buy more shares at that new lower price. His base cost would then be LOWER than it was... the average of the latest cost and the prior cost. As the stock returns to the upside, Charlie would sell the same number of shares he bought the most recent purchase at any time at or after the share price reaches the new average cost per share. The result is that Charlie would own the same number of shares and his profit margin would be GREATER than it would have been if he did nothing at all.
What's interesting here is that Charlie would not be trading back and forth on a "trader" stock. He would actually be increasing his profit margin on a long-term stock. The assumption here is that the long-term stock would have a setback that brings the share price to a level under his latest base cost. And this is now realistic in this current market environment, so it is entirely possible. Once the stock reaches a point that it's share price is far, far ahead of its base cost, then it is no longer possible to use this strategy any longer, unless Charlie was to establish a new and totally seperate account all over again, but leave the other account alone because it would not be wise to destroy the base cost that is so much to his advantage.
The next thing that is easy for Charlie to do on a long-term account, is to simply have a strategy in place that he buys more shares every time the stock dips , say 2% or 3%, or some number that he likes, but he should never sell unless he wants to ring the register a little, OR... the stock price actually takes a big hit and dips below the slowly-increasing base average cost per share, in which case Charlie should decide if he intends to continue to invest long-term or not, and if so, he would employ the strategy from above, and he would buy the stock at its lower price, and then sell the same number of shares once the price regains it's ground... leaving him with a new lower base cost and increased profit, and cash on the sideline to take advantage of the next dip.
This strategy of investing is not gambling. In fact, it is hands on responsible, and and is not riskier than ANY investment in the stock market. The only real risk that exists for a stock like AAPL is that the stock tops out and NEVER returns to its highs. That risk is the same no matter HOW Charlie is investing. If Charlie were to reach that point, he would sell ALL the shares except those (if any at all) that he felt MIGHT be worth investing on a super long term basis in case the stock were to ever return to an upward trend again.
The exception to this whole strategy of lowering the base cost would be if Charlie was convinced without a doubt that the entire position could be sold and then repurchased at a lower price, instead of averaging the base cost as I explained in great detail above. If the investor/trader was wrong, and the stock did NOT decline as expected, then any new position would be at a higher base cost, and the difference between the old base and the new base would be lost... either temporarily or permanently, depending upon further price swings, whereby Charlie could once again utilize the strategy to lower the average base cost... which would reduce or eliminate that loss, should it ever be realized.
Your concern that Charlie is not in a position to pay enough attention to the market action is very legitimate. If it's true that Charlie admits that he can not spend the time necessary, then his best bet would be to simply buy on significant dips. If he were to achieve a 2% advantage on his accumulated shares, as an example, that would be perfectly fine, IMO. The total PERCENTAGE gain would appear lower, but the overall total NET gain would be higher. IOW, as a math EXAMPLE only... a 5% gain on $1,000,000 of strategically accumulated stock is better than a 7% gain on $500,000 of "hands-off" stock and $500,000 cash. And, of course a 10% gain on $500,000 of "traded" stock and $500,000 of sidelined cash is even better.
I want to finish with this...
A "hands-off" long-term investor can NOT take advantage of the smaller micro-gains that are only available to the trader that is willing to work at harvesting them. The accumulation and sum of all those micro-gains can be significant and is NOT available to the "hands-off" investor.
A graphic example that I like to use is that long-term investing is like walking up a mountain while using a yo-yo.
The yo-yo's ups and downs are irrelevant to the final investment outcome of reaching the mountain peak (hands-off investing), yet the yo-yo's ups and downs represent many, many opportunities (trading).
Notice how BOTH occur at the same time! They are both available, at the investor's/trader's discretion, and willingness and ability to take advantage.
TM
First of all, I am talking about this type of trading with only the 90 shares I purchased yesterday. And as far as me not knowing what AAPL and Netflix was doing, it basically only involves Netflix. Since I had no desire to buy this stock I was paying zero attention to it over the past several weeks. As far as AAPL is concerned, I was not sure what it was doing back on Monday when I was driving all day. Otherwise, I watch Apple like a hawk.
But in any case, I am holding the great majority of my AAPL shares for the long haul. I was just thinking that if it were to sddenly jump back toward the highs of the other day ($423), I would sell he 90 shares I purchased yesterday with the hope that there will be a dip and I can then buy even more than 90 shares. Trust me. I will never match TM on short term trading.