Feb 13th, 2008
A Different Kind of Apple Switcher
I’ve been using Sharebuilder for some time for automatic monthly investments. Awhile ago I invested through them in the DVY exchange traded fund; I later switched to buying into Toyota when I came to the conclusion that not only did I need to look at companies based on some kind of magic formula for investing, but also companies that made products I understood and believed in. I’ve bought into Toyota for a couple of years now, and unfortunately, the stock price has gone down. But I have lots and lots of faith that the stock will recover, so I just think that I’ve bought a bunch on sale and I need to wait awhile to see how things go.
In the meantime, another company I like (and I have already bought shares of in my Roth IRA), Apple, has seen its stock price go south as well. I saw this before, in the summer of 2006, when it hit a low in the mid to high 50s. I thought to myself, “Wow, looks like a good time to buy Apple.” But I didn’t.
The stock then went on a tear; by the time I bought in, in early 2007, the stock was in the mid 80s. Right around the turn of the year, the stock touched the magic 200 number. Just a few weeks ago, Apple announced the best quarter they have ever had, and following that–the stock tanked, headed to the 120s.
To me, that’s time to buy, so I’ve switched my monthly stock buy from Toyota to Apple.
This is not an endorsement of the stock, but a discussion of my decision making processes. This is a highly profitable company that makes products I use and love. I understand their products, probably better than many others (since I’m a Geek), and I think very highly of their design and function. I own many of the things they make and I plan to own many more. For the same kinds of reasons, I own Toyota stock–I think it’s a profitable, well run company that make products I own and understand. However, there are many other companies out there that are publicly traded that I don’t own, largely because I don’t understand them or they make products I don’t care for and don’t own. For instance, I don’t own Microsoft stock, not because they aren’t profitable, but because I don’t believe in their products and I don’t own many of them. I don’t own Yahoo! because I don’t quite understand how a company that gives away as many services as they do without having the advertising income that Google does and doesn’t take in very much money for other services will be profitable over the long run.
In any case, I’m going with AAPL for awhile. Let’s see how that goes…
