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ATPM 10.11
November 2004



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The Candy Apple

by Ellyn Ritterskamp,

Buy Low, Sell High

Buy low, sell high. That’s how you make money in the stock market. I did that recently, but I guess I did not sell high enough. It is not so hard to do the research to decide what is a good company to invest in, but it is very hard to know when to sell. The indicators are not so obvious, at least not to me.

I bought 200 shares of Apple three years ago, not that long after it fell $27 in one day. I believed it was a good company that had been undervalued. I bought the shares at $21, $18, and $16. The average was $18.69. I sat on them until a few months ago, when the price had crept up to the low $30s. I began thinking about when I would sell the shares and decided that I would do so when I had doubled my money. Allowing for fees, I chose $37.50 as my sell point.

I was determined not to wait too long and have the price drop again, as had happened to a friend. He bought Apple shares at $20 or so and watched them soar to $80. Rather than sell, he thought he would hang on until they hit $100.

It was a nice idea but too ambitious. Shortly after he made this decision came the 27-point crash, and he was soon back below what he’d paid for them. It wasn’t enough for him to quadruple his money. He wanted to quintuple it. As a result, he ended up making a profit but not a large one (he sold at around $30).

So, I learned from this. I picked my sell point and sold. Days later, I watched the stock price rise $5 in one day. As of this writing, it has risen $11 from where I sold it. A friend asked how much money that was, and I said it is irrelevant. It is irrelevant because it is pretend money. He insisted, and I said it was $2,200. I also told him to stop checking Apple’s share price.

I sold because I was concerned that Steve Jobs might be out of action for a while after his prostate treatment, and I thought the Street would punish Apple’s share price for that. I also am concerned that so much of Apple’s attention is now focused on iTunes and iPods, and how much less attention is paid to the computer side of the business. It’s way cool that Apple is making money on low-overhead items such as music, but I worry that the market share of desktops and laptops will continue to dwindle beyond salvation. Are there enough of us die-hards to keep the company going? Can the music and the digital music players keep the rest of it solvent?

These are legitimate questions for a stockholder to ask. The numbers look pretty good lately, but I still have a nagging suspicion that the news will not always be so good. I want to be reassured. I want to know what the market is so excited about, driving up the share price like this. Until I feel more secure about it, I will stay with ALCOA. Y’all let me know if AAPL dips down below $20. I would buy it again.

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Reader Comments (2)

Rob Durnford · November 3, 2004 - 07:55 EST #1
Buy low sell high misses one point and that is hold some. When I buy I do so with the intent that when the shares are paid for by their increased value sell half. No cost for the remaining shares except the cost of money. Then ride the remaining shares for extra profit and potentially holding some for as long as the company appears to be heading up. The rest of the buy and sell in the particular stock should not be at prices that would jepordise gains.
Dean Flory · November 4, 2004 - 14:11 EST #2
Mark my words, Apple is using these small "other-than-computer" handhelds as a psychological backdoor to eventually offering the iPod as a complete computer. By having users confident in the name and product by already having an older model of an iPod in their pocket, Apple can just call it the iPod 2007 that runs OSX.6 "Lion" or something. The non-media specific name also tends to show some foresight into a multimedia device.

My only hope is that they DON'T create more than two simultaneous lines of iPods (oops, too late), same problem they faced in the '90s with too many differnt 8500s and Performa 636CDs, etc. I don't much care for the "iPod Photo" name, tends to make me a little weary about the possibility of spreading the iPod line too thin, just have a mini for music and photos and the full iPod for everything. :)

Since I'm babbling about features, another large step forward in gaining market share of multiple devices (in one) would be to add cell phone communications to it. Make it useful, then switch the whole thing over to OSX with some phone application. After tackling the online music store bit they should feel confident enough now to apply cell phone technology and services and deal with the pain that is sure to be. Oh, and a digital camera too, yeah, and Santa I'd also like a red bike and a dual gun G5 with 8GB of RAM and some new socks.

Guess we'll just have to wait and see. I believe Apple has just begun to develop new products for areas not yet touched. They're bound to eventually put together a full entertainment center/home theatre package; to bring the "digital" hub out of the little corner/closet office and into the center of your life (and home).

How about an Apple designed electric/hydrogen powered vehicle? 2030? Your credit card sized iPod could wirelessly network to the vehicle and open doors and start it up with voice activation. iPod eventually an arm band for convenience?

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