George Moriarty collected a long list of Seeking Alpha articles here (George hired me on theStreet.com in 2005, we've been friends ever since and now he is working for Seeking Alpha).
I had a similar post recently and the mania around Apple has grown meaningfully since then (well, I think it has). The last time I mentioned Apple it was around 18% of the iShares DJ US Technology ETF (IYW) and now it is 20.9% of IYW. IYW is an ETF we use for some of our clients.
Trying to predict when or how a mania ends is pretty close to impossible other than getting lucky (everyone gets lucky every once in a while) but this will end one way or another as they all do and it would be reasonable to expect some sort of shareholder pain. Maybe this won't happen until $900 but right here the stock is up 48% YTD which is amazing for what was already one of the largest companies by market cap (now it is the largest).In my opinion anyone who has made a lot on this stock would not go wrong selling some portion of it right here and continuing to (hopefully) ride up higher. If instead it starts heading lower then you sold at a pretty good time. I view this as a win no matter what scenario.
I have no argument to make against the stock, it has changed the lives of a staggering amount of people for the better and it is tough to envision what will come along to derail the company but figuring that out is not really something a portfolio manager needs to worry about (including do it yourselfers who are their own managers). This would be more for the analysts to figure out.
The reason I say portfolio managers don't need to figure this out is because they really just need to recognize that there is a mania that has sent the stock up at an unsustainable rate, know that this has happened many times before with other stocks (including AAPL) and deploy some sort of risk management strategy. I prefer the one mentioned above, other people may prefer stop orders, others may want to use options but some sort of protection would be warranted.
As for the picture; we have a lot of snow here.
3 comments:
Hey Roger are you selling IYW now since Apple has gone parabolic. In similiar vein how often do you rebalance your portofolio, yearly, quarterly etc. This could be another post and I would like to hear your thoughts.
Thanks.
SPX is up 11% YTD while IYW is up 21% YTD which makes this a good question.
However we have had a few holdings go up a lot as well such that the growth in IYW has not caused it to become much larger than the original target. The way the math works out AAPL is a hair over 3% of the portfolio which is more than we target initially for a stock but not enough for us to need to scale it back.
The context was more people who've held it a while and seen it go from 5% to 10% or 10% to 20% of their portfolios.
Roger,
Your last couple AAPL-specific posts prompted me to run a little exercise on my own portfolio using Morningstar's stock intersection screen.
Found out that all but one of my top 10 holdings were companies for which I took individual positions outside of funds.
The lone exception was AAPL, coming in at No. 7, solely by virtue of its popularity with fund managers.
Interesting result, but not really surprising.
KB
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