In One Up On Wall Street, published back
in 1989, mutual fund master Peter Lynch explains that the average person, using
information available to everyone (but not available as a statistic to Wall
Street), can beat the Street at its own game.
It’s a strategy that’s worked well for me.
A few months
ago my nephew, who has an iPhone4S and uses it constantly, visited me. I asked him how he liked it, and if he would
be getting the iPhone5. He told me that
his next phone would be an Android phone.
Why? Bigger screens, “cooler”
features, and that it’s far more customizable than the iPhone. The iPhone just isn’t hip anymore.
A few weeks ago, a small business banker I know – who is a huge Apple fan – received his
new iPhone5. Last week he sent it back
to Apple (the company graciously gave him his money back) and replaced it with
a Samsung Galaxy running Android software.
And he loves it. “It’s faster,
it’s bigger: it’s more reliable. Even
with Wi-Fi it’s very fast and never crashes.”
Note that he means faster than the latest iPhone5.
And now, of
course, the iPad is facing competition from both sub-$300 Android devices as well as the new
Microsoft Surface, which is receiving rave reviews.
I always
hesitate to sell an innovative, great company that makes reliable products. But, I believe that the competition has –
for the time being at least – caught up.
Apple stock has dropped from it's heady peak of $705 in Sept 2012 to $571 today, giving it a decent P/E of 12.9x. It seems like a big price drop - and maybe a bargain - until one remembers that before Steve Jobs came back on board, Apple was selling at $89. The risk/reward balance just isn't there.
It’s time to sell Apple, if you haven't already.
It’s time to sell Apple, if you haven't already.
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"Although it's easy to forget sometimes, a share is not a lottery ticket...it's part ownership of a business."
Peter Lynch
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