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(Apple) Stock - profit taking

post #1 of 11
Thread Starter 
I am out of my league when it comes to the stock market, and I hate to ask stupid questions; however, I've always felt that the question you don't ask IS stupid.

1. What is the purpose of holding on to a stock, like Apple, if it doesn't pay dividends?
I realize that if the stock price is rising that it will be worth a lot more than you paid for it. But if you don't sell, you are no better off.

2. When the gurus say that a stock, like Apple, is going to go to $xxx, you may take a chance and wait till it hits that price and then sell. But, even if it goes to that price, it may not stay there. Why not sell at that high point? Why keep it? Some of you have said that you bought in at double digit prices and are hanging on to it. I may be missing something, but, without dividends, you're not making a profit. What is your motive? The stock may continue to rise in value, but what good does that do if you don't sell.

3. Recently, Apple went to about $205. I got in at about $134. I thought about selling, but got greedy and waited. It dropped to circa $190. With the price yo-yoing like that, do you guys buy and sell while that is happening? Even if the difference isn't great, it would still be profit. Should I be doing that?

I may be repeating myself, but I'm trying to understand how to take a profit.
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post #2 of 11
Three rules tell you when to take a profit. Unfortunately, nobody knows what they are.

Seriously, this is the single hardest decision to make in investing. Some like to sell enough of their holdings to cover their initial investment. I have a hard time understanding that strategy, because it really doesn't describe a rule you can follow.

AAPL is one of the most volatile stocks you can hold. If you don't have the stomach for watching your portfolio seesaw in value, then you're probably going to sleep better at night by dumping it when you've made a goal you've set. If you think you understand where Apple is headed as a company and think that direction is sound, and can stand the fluctuations, then hold on for the ride, and don't worry about what it does in any given day, week or month.

The analysts make one-year price forecasts, but they are just that, forecasts. Like the weather, you're better off not relying on them.
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post #3 of 11
Quote:
Originally Posted by sequitur View Post

I am out of my league when it comes to the stock market, and I hate to ask stupid questions; however, I've always felt that the question you don't ask IS stupid.

1. What is the purpose of holding on to a stock, like Apple, if it doesn't pay dividends?
I realize that if the stock price is rising that it will be worth a lot more than you paid for it. But if you don't sell, you are no better off.


Oh! Is that true?? I mean?? Is it true that Apple doesn't pay dividend???
post #4 of 11
Thread Starter 
Quote:
Originally Posted by Azhar View Post

Oh! Is that true?? I mean?? Is it true that Apple doesn't pay dividend???

Apple is amassing huge cash reserves.


"Apple is Cheating You." ????
http://www.fool.com/investing/genera...ating-you.aspx
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post #5 of 11
Good article, thanks for posting it.
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post #6 of 11
Thread Starter 
Quote:
Originally Posted by Dr Millmoss View Post

Three rules tell you when to take a profit. Unfortunately, nobody knows what they are.

AAPL is one of the most volatile stocks you can hold. dump it when you've made a goal you've set.

Followed your advice; a few days ago, I sold at just over $207; made about $7300 on 100 shares purchased at about $134. Who needs dividends? The $7300 will keep me in new computers for a few years if I don't buy back in.

Now AAPL has been dropping. If it drops about 10 points, I'll buy back in. If it soars, I'll kick myself. Is this a great stock or what?
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post #7 of 11
Quote:
Originally Posted by sequitur View Post

Followed your advice; a few days ago, I sold at just over $207; made about $7300 on 100 shares purchased at about $134. Who needs dividends? The $7300 will keep me in new computers for a few years if I don't buy back in.

Now AAPL has been dropping. If it drops about 10 points, I'll buy back in. If it soars, I'll kick myself. Is this a great stock or what?

Good luck with your market timing, you're going to need it!
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post #8 of 11
I was told to buy and sell in thirds.
Watch the stock you're interested in, start buying as its dropping, and sell when it starts climbing, not all at once. This was you can buy back in or realize a bigger profit.
post #9 of 11
I sold at $205, right now I am short oil. Oil storage is very high, demand is dropping, unemployment is high and getting higher. Also the market tries to inflict the maximum pain on the maximum number of people - and right now that would be a dollar rally, which would trash oil, stocks and gold. You can see the intense investor fear when you look at short term treasury rates - the rates are negative, people are paying the government to hold cash for them (which also happened last fall around the time of the Lehmann bankruptcy).

I think that oil will drop from $77 to $30 or so, and we will also have a 2nd stock market crash.
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post #10 of 11
Like I said above, good luck with your picking and timing -- knowing that beating the market averages by stock picking and market timing is almost impossible over time. Even the pros can't do it.

Myself, I'm hoping to get out of owning individual stocks almost entirely over the next few years.
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post #11 of 11
Quote:
Originally Posted by sequitur View Post

I am out of my league when it comes to the stock market, and I hate to ask stupid questions; however, I've always felt that the question you don't ask IS stupid.

1. What is the purpose of holding on to a stock, like Apple, if it doesn't pay dividends?
I realize that if the stock price is rising that it will be worth a lot more than you paid for it. But if you don't sell, you are no better off.

2. When the gurus say that a stock, like Apple, is going to go to $xxx, you may take a chance and wait till it hits that price and then sell. But, even if it goes to that price, it may not stay there. Why not sell at that high point? Why keep it? Some of you have said that you bought in at double digit prices and are hanging on to it. I may be missing something, but, without dividends, you're not making a profit. What is your motive? The stock may continue to rise in value, but what good does that do if you don't sell.

3. Recently, Apple went to about $205. I got in at about $134. I thought about selling, but got greedy and waited. It dropped to circa $190. With the price yo-yoing like that, do you guys buy and sell while that is happening? Even if the difference isn't great, it would still be profit. Should I be doing that?

I may be repeating myself, but I'm trying to understand how to take a profit.

ANSWER 1: Without dividends, there's little reason to buy and hold, unless you are reasonably certain that the company you buy is diverse enough to grow with you. So then, a dollar cost averaging method can be quite profitable in the long-term. But the markets are different now, more volatile. A far better strategy is to buy when economic cycles are in your favor, sell when those cycles are exhausted.

ANSWER 2: You can't make money off an investment unless you sell it at some point. When analysts pick a target price, they are basing that on complex fundamental analysis. The problem is that the market cares little about fundamentals, it's driven by sentiment and supply and demand. It is influenced by fundamentals to a degree, but if there's no market for a stock, it doesn't matter how good the fundamentals are, no one is going to buy it, and the lack of demand will drive the price down.

ANSWER 3: You should be weighing your risks and develop positions based on your risk tolerance and risk capacity. You should hedge your positions to protect against erratic, sometimes violent moves in price. Placing stops, purchasing shorts, developing risk adverse strategies using options are all things to consider. But the most important is diversification.

If you want to know more about how people trade and invest in AAPL stock, visit apple-investor.com, that's all we do there.

-ernie
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