When I bought Apple (AAPL) stock a few weeks ago for around $140 (worth $16,000) before the launch of their latest iPhone, I was pretty confident about the prospects for the stock.
I expected some short term volatility as it is a growth stock, but since my purchase it has fallen steadily to about $125. So a loss of nearly $2,000 in less than a month.
Even though it is a paper loss, it hurts. It also makes me wish I had waited to buy, but my research and to some extent market hype surrounding stock, made me pull the buy trigger when I did.
I am going to hold on though, even as they report their quarterly earnings soon. Historically their stock price has been quite volatile around earnings and could easily shoot up or down 10% after the announcement.
Many analysts are expecting that Apple will beat earnings expectations, but that it may not provide a very optimistic earnings guidance. As stocks are priced based on future expectations, a guidance that does not line up with analyst expectations can result in the stock being severely punished.
So from the above and all my other reading (and I have read a lot on this stock!), most analysts are bullish on Apple in the medium to long term, but feel the share price will drop in the near term as market expectations are too high.
Perhaps I did buy too early after all. However, my horizon is 3-5 years and I will stick to my mantra of “Long term, Long term…investing = patience”.
In talking to a colleague he even suggested I sell the stock before the earnings and buy it back the day after.
Another strategy I could also use is to buy Apple put options, but for the amount of stock I have this is too expensive. So I think I will sight tight and go along on the Apple roller coaster ride.