Remember back in late 2015 and early 2016 when the stock markets were crashing, fears were high and Apple was near $100/share?
That’s when Apple was a relatively “safe” stock to buy and that’s exactly what Trading With Cody subscribers and I were doing. Read these Trade Alerts from back then and try to remember how scared you were and how hard it was to actually buy stocks in the midst of all that fear and panic that surrounded you and the stock market.
Most hedge funds and lots of other money managers and most retail investors have had a down year this year, as small caps and energy and the average stock is down too. Robert Marcin, a good friend, stock mentor and the best value stock picker I’ve ever known rightly noted this morning that: “The median stock in the more comprehensive universe measured by the Russell 2000 is down 9% ytd. With today its probably closer to 10%. That is rather indicative of the average stock and portfolio, I would bet. 1/3 of the index is down around 20% or more. Just goes to show how difficult a year 2015 has been, especially for small/mid caps.”
I learned long ago that we can get an edge on our career and on our portfolios by doing the homework that others won’t and working when others rest. This week, I’m working and rummaging through all the carnage away in the individual stocks in this market to see if we can find a few nuggets to nibble at.
I’m nibbling some Apple common stock this morning, adding back the small tranche I’d sold back when it was near $130 per share earlier in the year. As I wrote at the time:
“Not the best of set-ups right now: AAPL – I think it’s time to trim a little bit more of my own. The stock’s up about 30% in a straight line and the hype around the coming Apple Watch is growing exponentially too. So, discipline over conviction. Following the playbook. Making the hardest trade. I personally am trimming a bit of it today, about 10% of my position.”
Selling Apple at that point was tough in large part because the chart was straight up and felt like it would go on forever. Buying those shares back with the stock acting like it’s in a funk and with fear rising about the stock and the iPhone and the consumer and China and so on. We sold some when others were euphoric, now we buy some back with others are fearful. I don’t know if the stock bottoms here or not, but I’d likely buy another tranche if it goes below $100.
January 4, 2016 By
Stocks getting hit hard early after a 7% sell-off in China stocks and a broad sell-off throughout Europe and Asia.
Any fear out there? With the DJIA down -400 and the trading year not even 0.001% over, I think it’s a great time to do our poll. Who’s more scared right now, the bulls or the bears? I think the answer will likely be rather unanimous right now that it’s the bulls. And that is likely a good indication that we should be trying to take advantage of others’ fear and buy into the panicky sell-off here this morning.
We don’t have to be heroes, we don’t have to draw a line in the sand. But we have been following our playbook of buying weakness and fear; selling euphoria and all-time highs; taking profits and cutting losses; reducing the total number of positions and overall long exposure when stock markets were at all-time highs; etc. This is one of the steps we take on our marathon race of maximizing our upside and minimizing risk for our portfolios over the next 10,000 or so days of our lives.
So I’m going to go ahead and put some money to work this morning, nibbling on some of our existing portfolio names and in most cases buying back some of the stock we had trimmed at higher levels.
I’m nibbling another 1/10th-sized smallish tranche here in Apple at around $103, a second recent tranche adding to the shares I’d nibbled on last week and the much larger core position I’ve owned for many years.
Well, many stocks, including (especially?) technology stocks have been smashed in the last few days. Let’s look at some charts for some perspective. Looking back over the last, say, three months, you can see that some of our biggest long positions have been up nicely, while I’ve also unfortunately ridden some losers lower:
Let’s review our playbook. We seek to own companies with very strong balance sheets that are revolutionizing and/or outright creating their industries. We try to buy those companies cheaply/early like we did with Apple in 2003, Google on its IPO, FB near $20 after its crashed IPO, First Solar after letting it crash in the alternative energy bubble pop, and hold onto them for many years. We start small and slowly in each position, recognizing that there will be many ups and downs in each stock in the years ahead. Since we believe in these companies ability to grow as they revolutionize their industries over many years, we scale into our long positions when the stocks are getting hit and we trim them when stocks rally hard. We get aggressively long after stock markets crash and we whittle down our long exposure when markets bubble.
Long-term subscribers know that we’ve trimmed our remaining longs, and outright reduced the total number of longs in the portfolio and added shorts in the last few months. All that said, I don’t think we’ve seen the last of this Bubble Blowing Bull Market.
I am planning on adding couple new names to the portfolio in the next day or two as there are some opportunities to buy some very good companies with great balance sheets at big discounts to their recent highs.
In the meantime, today, I’m going to go ahead and make two buys today, increasing my net long exposure a little bit more into this sell-off. First, I’m going to nibble on some Apple call options here. I’m buying a small batch of AAPL call options that expire in March with strike prices around $105 for about $3.50 each. These options, along with my existing long-term core position in Apple common stock when I’d bought more of last week, will essentially make Apple my largest position once again, as it has been many times in years past.
Okay, Cody back in real-time here February 15, 2017. I think it’s time to trim a little bit of my Apple common stock, in large part because I had increased my exposure to it so much back when it was down and we had the chance and I still have some of the Apple shares from those call options. Meanwhile, over the last couple months, the stock’s up about 40% in a straight line and the hype around the coming Apple iPhone 8 is growing exponentially too. So, discipline over conviction. Following the playbook. Making the hardest trade. I personally am trimming a bit of it today, about 10% of my position.
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