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It’s All Apple’s Fault: I Broke The 5 % Rule!!!

|Includes: Apple Inc. (AAPL)

I am sure you already heard that it's good practice to limit your holding of a specific stock to a maximum of 5% of your total portfolio. Anyone with a pragmatic view on financial planning would tell you that it makes sense to avoid an unexpected capital loss. Well I broke this rule but it's not my fault, Apple has been to efficient in free cash flow management. Back in 2013 I couldn't resist getting into Apple's stock, because of a ridiculously low P/E ratio, and I didn't think the company would end up like Blackberry. Well that bet paid off, since I am now sitting on a sizable capital gain on both my TFSA & RSP accounts. (see below)

But I just can't cash out yet, because Apple is doing everything they can to maintain a good free cash flow. I can except a 10% annual raise for next couple of years and with a 3% yield on cost to my purchase of those Appl stock, I am looking at an average of 13% annualized return. In the current market valuation you would be hard pressed to find a safe large cap that can deliver a better estimated return.

So this is why I broke the 5% rule, I might be wrong but I doubt it.

Disclosure: I am/we are long AAPL.