Why I'm Selling Apple and Google Today - and Holding Amazon 31 comments
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I posted quite a bit late last year about the fact that I was actively buying Google (GOOG), Apple (AAPL), and Amazon (AMZN) during the market meltdown. From late September until Thanksgiving, I bought these stocks four or five times as they dropped their late November lows. Over that period I built up positions in all three stocks that averaged into some pretty attractive prices. The average price I paid for GOOG during that period is $320, the average price I paid for AAPL during that period is $87 and the average price I paid for AMZN during that period is $37.50.
My thinking was (and is) that these are great companies and the market was just "giving them away." Nobody was buying them, so I figured I should. And I did.
Last night I went out to dinner after the NY Tech Meetup with a bunch of friends including several pretty sharp public market investors like Howard Lindzon, Roger Ehrenberg, and Phil Pearlman. We got to talking about stocks as the dinner went on and specifically we talked about Apple and Google.
The story on Apple is Jobs and his health. There were eight of us in all at dinner and not one of us, I mean nobody, believed Jobs is healthy. And none of us believed that Apple's PR team is being straight on this issue. As good as the company is, I just can't own a stock when I don't believe the company is being straight with investors. So I am selling my entire position in Apple this morning, including the stock I bought earlier than last Fall. My average price on my entire position in Apple is $96, so I'll take a small loss on this and a small gain on the stock I bought during the meltdown last Fall.
The story on Google is more complicated. I still believe completely in my thesis on Google. I think Google is incredibly well positioned in the Internet economy and I think it's a bargain at ~$100bn. But it's run from near $250 to almost $350 in the past month and a half and we still don't know how their fourth quarter came out. I can sell my entire position in Google, including stock that I bought earlier in 2008 at much higher prices, and get out whole. And I can make a small gain on the stock I acquired during the meltdown. So I've decided to do just that, watch how the first quarter comes out, and then think about rebuilding a position in Google once we know how the bad economy is affecting their business and how they are going to react to it. I said in my wishes for 2009 that I would love to see Google "rationalize their business". If they actively start doing that, then I'll get back into this one with even more zeal.
I'm keeping my Amazon stock. I love what Bezos is doing with that company and I think Amazon is going to come out of this downturn stronger than ever.
So that's the story. I thought I'd tell you before I actually sold the stock, which I'll do this morning when the market opens via limit orders.
Disclosure: At time of writing, long GOOG, AAPL, AMZN
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This article has 31 comments:
Apple is more then just one person.
Amazon - great company but PE is no cheap.
Google is the internet. Nuff said.
I am a contributor on thecreatingwealthblog....
I wish I owned more of them.
Incredible. The upside to Apple is just monstrous, but being completely drowned by Steve's private, personal issues.
If as is now being suggested, the iPhone/iPod 'platform' takes over the smartphone market just as the iPod and iTunes did with MP3 players 4years ago, APPL revenues will spiral.
That's without the unstoppable march of the Mac computer.
Blinkered. Unseeing. Nervous. Good luck naysayers, shorts and others trying to talk down Apple.
I bet you will see him in very good health in the spring. By that time the stock will have put on 30%.
Fear indeed !!
..so-called bad news is in the stock.
As for disclosure - holding the stock, selling calls, buying puts.
Thanks
- Amazon: Hmmmmm?
- Google: Hmmmmmm?
- Apple: Release their OS for all PCs. Release a netbook. Get movie makers allow DVDs to be ripped once so AppleTV becomes the iTunes of movies.
Apple is poised for continued growth in ways that no other tech company is.
And, what if Bezos steps in front of a bus, or is in an automobile, plane, train, etc. accident? Are you then going to sell AMZN because its leader died?
AMZN, AAPL, and GOOG are more than just their current leaders. Each has tens of thousands of employees. I doubt that the leader of each of these companies does EVERYTHING.
These well run companies may have a godhead, however, there are many excellent executives and employees at each of these companies that can continue with the corporate road map.
That would be misleading investors and is illeagal. although i think ur right in selling aapl, Your doing it for the wrong reasons. christmas is over and aapl is not gonna start comming out with any gizmos of substance till the spring. thats when everyone starts jumping back into tech and apple look at its chart
I agree with the Authors decision to sell Apple and Google. They are great stocks, but given the current market conditions, I think they are mostly going to be moving sideways. And yes, Apple is going to be putting out some more insanely great products. However, I suspect people are in a cash conserving mode, and they will put off purchases of things they really don't need until they feel safer with respect to their economic prospects. I have two G4s that I want to replace, but I am waiting. Amazon appears to be at a support level, and the next support level is around $75. I see more downside potential than upside for Amazon in the next six months. So I would wait.
The perception of Apple, Google, or Amazon being currently cheep is based on their market valuation during a large speculative bubble. It took many years for that bubble to form. Ruminations that Google is going to be back at $500 to $600 at the end of 2009 do not seem realistic. Yet if you look at the current S&P projected year end price of Google, its $500…. Of course, S&P provide no method for their projections. This leaves the investor to wonder if the projection is valid, or if S&P is touting the stock….
I disagree. The story on Apple is valuation and expectectations. Both are too high. Same with Google.
On Jan 07 05:16 PM Freund Investing wrote:
> "The story on Apple is Jobs and his health."
>
> I disagree. The story on Apple is valuation and expectectations.
> Both are too high. Same with Google.
Mr. Jobs is perhaps the most underrated CEO in the world. Look at the companies he's built up: Pixar & Apple & NeXT. Look at their products and their balance sheets. Pretty amazing.
When he was away from Apple in the `90s, it was a disaster.
Good leaders make good companies. Good leaders and managers make great companies. SJ is both.
Check out companies around the globe and you'll find a mere handful comparable to him.
Run down the list of public companies, compare their products, marketing, and balance sheets, and it's quite easy to see why he's a super-important part of Apple.
And it's not simply what he's worth short term; finding someone to replace him would be a tough task and would affect the company from now on.
What's your thoughts on the future of sales tax on the internet. At some point, with all this money we are spending, i assume that will be looked at as a possible solution to get extra money. If amazon is taxed, their no different than anyone else on the street (after various rebates and what not). I love em, and I shop there a lot, I just can't own a Blue chip with a PE of 34
The prime time of investment opportunities for the so called: TECHNOLOGY sector, namely computer/network/inter... and personal devices and enterprise software(ERP) was long gone.
The next big thing coming is stem cell based regenerative medicine, this is a huge field as big as TECHNOLOGY if not bigger. From the hardware(tools) to treatments to drugs, this is the golden opportunity for those who do some study, dig in further, a lot have been going on yet a lot more will be happening as the new year unfolds especially in "adult stem cell" area.
Investment in tools, treatments or drugs now is like investment in TECHNOLOGY a decade ago in hardware, software and internet/mobile devices.
Investment in stem cell exectraction/preservat... tools is the safest and the 1st to be rewarded, then treatments and then in drugs. Treatments and drugs will have the biggest winfall but they are further down the pipeline in terms of timing.
Disclosure: long tool stock (KOOL), lurk on a few stocks in treatment and drug with stem cell/regenerative medicine flavor.
So much (business) momentum here and ridiculous cash flows and cash in bank to withstand any short term economic difficulties.
But I've learned just how much markets can overshoot on the down side. Not selling here, but waiting for another drop before buying more.
Fred was right.